Market Attempting To Stabilize, But Early Gains Hard To Maintain

The market is rallying again in early trading, although we saw this pattern yesterday, and by the close the strength had faded such that the S&P 500 actually closed down yesterday. Let's hope today's strength proves more lasting.

The early strength seems to stem from Europe, where there was no significant news other than some tough talk from Spain about their deficits, but the markets there rallied and that emboldened buyers in the U.S.

The dollar was flat earlier, but it is starting to rally a bit as the euro slides again. Oil is trading up slightly near $76.70, but gold is having another strong rally, and breaking to new highs near $1240. That's a pretty big move, and the love affair with gold seems to be building. Although I have not had the usual calls from unsophisticated clients asking me to buy them more gold yet.

Among the sector etfs, tech is leading (+1.87%), followed by industrials (+1.52%), while consumer staples are lagging (+0.15%). Among the sub-sectors, transportation is up +2.0%, and defense is doing well (+1.60%) also.

Asian markets were mixed overnight; the 10-year yield is higher to 3.56%; and the VIX is falling -10% to 25.50, a good sign for the bulls.

Trading comment: The S&P and Nasdaq are rallying back toward the underside of their overhead 50-day moving averages. I need to see these key levels recouped to make me more bullish. On the plus side, the small-cap Russell 2000 has already recaptured its 50-day, so maybe it is acting as a leading indicator. We shall see. The S&P needs to close above 1173, and 2416 for the Nazz.

Another positive is that the put/call ratios have been very high for the past 5 days in a row. This is a good contrarian sign, in the sense that prior trading bottoms in the market have been preceded by spikes higher in bearish sentiment. So this too bears watching.

Some leading stocks continue to act extremely well (AAPL, FFIV, VMW, CRM, NFLX, DECK), while others look like they have broken down (GOOG, PCLN).

long AAPL, FFIV, GOOG, GLD, VMW