Early Look

The market is slightly higher in early trading, after 3Q GDP came in in-line at 2.0%. That's an increase from last quarter's 1.7% rate. I think 2% GDP growth isn't that bad coming off of a stimulus induced year like last year. Call it a mid-cycle slowdown. But I don't think it's so bad that it warrants another round of quantitative easing.

I understand that the high unemployment rate is an issue, and I worry that the Fed is becoming too political in its response to these things. But I seriously doubt that another round of QE is going to have much of an effect on employment. I think it's just going to take time, as wounds from the great recession heal and businesses move on and look forward.

Asian markets were lower overnight; the 10-year yield is lower to 2.62%; the dollar is flat, as is oil at $81.80 and gold is up a bit to $1348; the VIX is up a little to 21.0.

Check back for my Trading Comments after the close today--

Jobless Claims Continue To Fall

The market was higher after the open, possible in reaction to a better jobless claims number, but it has since given up those gains and is slightly lower on the day. It could be that the market is a little tired after the multi-month rally, but that could be a good thing.

Next week is the big FOMC meeting, and if the market rallies into that meeting, it would surely be met with selling. But if people are trying to sell ahead of the meeting, then a pullback now might be healthier, and put the market in a better position to digest the FOMC news without too big of a setback.

Jobless claims this morning fell by more than expected, down 21,000 from last week. Moreover, continuing claims fell by 122,000 to their lowest level in nearly two years.

Among the sector ETFs, defensive funds like healthcare (+0.42%) and consumer staples (+0.28%) are bucking the weakness, while industrials (-0.31%) are lagging.

Asian markets were mixed overnight; the dollar is lower this morning, which is helping oil rise to $82.15 and gold prices bounce to $1332; the 10-year yield is lower to 2.67%; and the VIX is up +2% to 21.01.

Hint of "QE2 light" Sparks Profit Taking

The market has been rallying steadily since early September, due in part to the expectations that the Fed was going to announce another round of quantitative easing (QE2), or asset purchases, to keep interest rates low and stimulate the economy.

Last night, an article in the WSJ threw a little cold water on the amount of QE that the Fed might actually announce next week. This weighed on overseas markets early this morning, and also led to selling in the U.S. markets after the open.

It is also leading to a small rally in the dollar, which as I have mentioned lately has an inverse correlation to the overall market. So you have the dollar up, stocks down.

The strong dollar is also weighing on commodities. Oil and gold are both down more than 1% to $81.15 and $1324, respectively. Financials and tech are down the least so far this morning, while most other sectors are down 1% or more.

There were some more good earnings reports last night, and some tech stocks are responding well. F5 Networks (FFIV) reported solid results, and its stock is up +13% today; Illumina (ILMN) had a good report, and the stock is up +7.5%; Broadcom (BRCM) also beat and raised guidance, stock +9.5%. FFIV is actually at a new high, so it looks like the cloud stocks are back in the game.

There was some good economic reports today, but they are being ignored by stock investors. Durable goods came in much stronger than expected (+3.3%), and new homes sales also grew by a larger than expected amount (+6.6%).

The 10-year yield is up again, reaching 2.68%; and the VIX is rising +8.5% today to 22.0, bumping right up against its overhead 50-day average.

Trading comment: This is a perfectly normal pullback, and considering that all of the pullbacks lately have only been 1-2 day affairs, I want to at least do a little buying today or tomorrow. If we wind up getting a deeper pullback, then I would look to make additional buys.

The market could certainly take a pause, especially with the big FOMC meeting next week where the market will be eagerly anticipating what the Fed says about QE2. But beyond that, I still think the market will work its way higher into year-end.

long FFIV, ILMN

Stocks Open Weak On Dollar Strength

The inverse correlation between the dollar and stocks is pretty amazing. You can cite the economic data that came out this morning if you want, but the first thing I noticed was the the dollar as up, and so stocks were down. As I said, this relationship can last for awhile, but I doubt we can enjoy a sustainable bull market on the back of a weak dollar.

As for that economic data, October Consumer Confidence came in at 50.2, up from 48.5 last month. In housing, the CaseShiller index for August came in at 148.6, which was slightly weaker than the prior month's reading of 148.9. But year/year, the 20-city price composite rose +1.7%.

There was also another round of solid earnings reports last night, but most of the stocks are lower today. US Steel (X), Amgen (AMGN), and Texas Instruments (TXN) are all lower, while Coach (COH) reported great earnings and its stock is flying +10%.

Asian markets were mostly lower overnight, as was Europe this morning. This despite the UK posted stronger than expected GDP growth, and having their sovereign credit rating affirmed by Standard & Poor's.

The dollar rally is weighing on commodities a bit, with oil and gold trading down fractionally to $82.50 and $1337, respectively.

The chart below shows the 10-year yield, which is bouncing above its 50-day average for the first time in several months. It's hard to believe a new uptrend is at hand, given that the Fed is likely to announced new QE measures next month, but it's interesting nonetheless.

Trading comment: Boy, this market sure doesn't go down easily. Must be very frustrating for the bears. As I am finishing this post, the Nazz is already back in the green while the SPX is just about to go positive. Stay the course.

long COH

Monday Morning Musings

The market is once again emboldened by the weak dollar, which seems like a relationship that can't last in the long-term. But in the short-term, the dollar is moving lower and the market is making new multi-month highs.

Over the weekend the G-20 met, and that has helped the euro and yen both rally at the expense of the greenback. This is also boosting commodities, with oil and gold both up more than 1% to $82.70 and $1343, respectively.

Other than that there is not much in the way of market moving news this morning, but that seems to be enough to have the S&P 500 rallying above last week's highs and getting closer to the 1200 level.

Among the sector ETFs, materials (+2.38%) are rallying the most, while utilities (+0.41%) are up the least.

Asian markets were mixed overnight, with China rallying but Japan slumping due to the high yen. The 10-year yield is falling today, back near 2.50%. And the VIX is up a scant 1% to 19.00.

Trading comment: Nothing really new to add to my strategy. The market continues to stairstep higher, and it has made sense to hold on to winners more than trying to trade around them and take profits, looking for a spot to get back in.

The "cloud" stocks that I wrote about a couple of weeks ago (CRM, FFIV, VMW) continue to trade well. CRM and FFIV have recaptured their 50-day averages, while VMW has yet to do so. FFIV reports earnings tomorrow, so there is still one more hurdle to get over. But barring any major hiccup, this group could be back in the driver's seat soon.

Overall, the market is still a little overbought, and I think it will have a tough time capturing the 1200 level this week. Of course, anyone who hasn't given this market the benefit of the doubt lately has been really wrong. Good luck out there.

long CRM, FFIV, VMW

Quick Look: Market Holds On More Solid Earnings Reports

The market is slightly higher in early trading, as more good earnings reports roll in. Restaurant stocks reported strong results, with stocks like Chipolte (CMG) and Cheesecake (CAKE) vaulting higher this morning. Tech stocks like BIDU and RVBD are also very strong, with the latter declaring a 2-for-1 split. I hope AAPL and some others decide to split their stocks also.

Asian markets were mixed overnight. The dollar is roughly flat, with oil prices up a bit near $81 and gold prices off a bit to $1324.

The 10-year yield is still climbing, now at 2.56%, right up against its overhead 50-day. And the VIX is nearly unchanged at 19.15.

Trading comment: The market continues to hold up well. Yesterday, the early selloff faded late in the day, and it looked like it might turn into a big selloff. But the market found its footing late in the day and avoided a down day. The S&P 500 continues to hug the 1180 level. Many stocks are extended here, making new buys somewhat difficult, but keep a list of those reporting strong earnings as they will be the best candidates on any pullback.

long AAPL

Tuesday Selloff Now Looks Like One-Day Wonder

The market is in rally mode once again, with the S&P 500 making new multi-month highs this morning. Yesterday I commented that if the market stayed strong it would make Tuesday's selloff look like a one-day pullback. Today that appears more likely to be the case.

Earnings reports continue to come in strong, with few disappointments. And investors continue to put money to work buying stocks. As Raymond James' Jeff Saut put it, for underinvested portfolio managers (whose job performance is on the line) the incessant rally in the market over the last 6 weeks has been a nightmare.

Some of the companies reporting strong earnings and seeing positive stock action include: EBAY, UPS, CAT, FITB, and STI.

Asian markets were mixed overnight, despite China reporting that its GDP increased +9.6%, slightly above expectations. This was a bit of a slowdown from last quarter's 10.3% rate.

The dollar is slightly weak this morning. Oil prices are down a bit to $82.15, while gold prices are roughly flat near $1343.

The 10-year yield is higher to 2.50%, and the VIX is down another -4.3% below the 19 level (18.94).

Trading comment: The market is again a little overbought, but that hasn't meant all that much lately. If you have held onto your positions, you are very happy. Any profit taking has yielded little chance to get back in. I had a conversation with a client yesterday where we discussed buying a few stocks that have run up, but might not pull back. We decided to buy a half position so that we could at least participate in further upside, while leaving room to add to the positions in the event that the stocks did pull back. That's one way of handling this market.

Earnings Seasons Rolls In With Strength

The market is rallying nicely in early trading, reversing much of yesterday's selloff. It remains to be seen if this action holds, and if yesterday's decline will just be a one day pause. But so far the action looks good, and many companies are reporting solid earnings.

In tech, YHOO reported solid earnings and its stock is higher. In financials, Wells Fargo (WFC) and USB reported good earnings and those stocks are higher also. Morgan Stanley (MS) was unable to match the solid results from Goldman yesterday, and its stock is lower. And industrials are mixed with United Tech (UTX) and Boeing (BA) reporting good results, much their stock action is mixed.

Among the ETFs, materials stocks are leading the action, while financials are lagging. Financials were in negative territory earlier, but positive comments from Wells Fargo during their conference call seems to have improved sentiment for the group. Wells said that loan demand is improving.

Asian markets were lower overnight, following the selloff in the US yesterday; the dollar is also lower today, which is helping boost commodities. Oil prices are higher to $80.57, and gold prices are basically flat near $1335.

The 10-year yield is holding at 2.48%, and the VIX is down slightly to 20.18.

Trading comment: The S&P 500 held yesterday near 1160, which is right around its 20-day moving average. For now, that will be the line in the sand. If we can hold above those levels, then I think the market should continue to work higher after a brief pause. If we break below those levels, then I would look to the 1150 level as the next area of support.

I am also watching the market leading stocks that have sold off following earnings reports. I want to watch for them to consolidate and find support. If they can get back above their 50-day averages, then I would add to them. But if they can't get back above those levels, it might be time to sell remaining positions.

long WFC

Buy The Rumor, Sell The News: AAPL, IBM

The markets are lower this morning, which is not all that surprising given the strong multi-day run we have experienced. There is an old saying in the market, "buy the rumor, sell the news", and that looks to be in effect today.

You see, many thought that AAPL would report very strong earnings. That is why the stock ran up nearly 15% in the last 10 sessions prior to reporting earnings. Apple's earnings last night were fantastic, but that doesn't mean people are going to take profits after that strong runup.

You may hear things like they didn't sell as many iPads as the Street expected, or that gross margins were a little low. Don't buy it. The company trounced earnings estimates, and that is the most important factor. Earnings growth drives stock prices, and as earnings estimates continue to be revised higher for the company, the stock will regain its footing.

Ditto IBM, which reported solid earnings but there was no way the stock was going to be up on the news given how much it has rallied in the last several weeks. Goldman's stock is up nicely after beating its recently reduced estimates.

Asian markets were up overnight, but after China closed it was reported they would raise their 1-yr lending rate 25 basis points. That has the dollar rallying today, and is weighing on commodities. Gold prices are down nearly -2.3% to $1340, while oil prices are down to $80.88 today. Gold has also had a big run, so some consolidation there is warranted.

The 10-year yield is up to 2.52% today, and the VIX is rising 5% today to 20.10 so far.

Trading comment: I think many of these reactions to earnings are normal, given that the stocks are up a ton and expectations for earnings were already very high. The fact that AAPL, IBM, VMW, etc. beat earnings estimates nicely should mean that the stocks will be strong again after some profit taking and consolidation. The trends that drove the earnings growth are still in place. So I'm being patient, letting the stocks come down, and then deciding which positions I'd like to add to.

long AAPL, VMW

Back In The Saddle

Trying to dust off the morning cobwebs after a mini vacation towards the end of last week to celebrate my b-day (it was a big one). We had a great time, but waking up with the ocean outside your balcony now seems like a distant memory already.

Back to the swing of things. The bank index was very weak late last week, with all of the confusion surrounding the mortgage mess. Citi reported solid earnings this morning, and the bank index is actually bouncing back to lead the early action.

After financials, utilities are up the second most (+0.77%), due to some M&A there. Consumer discretionary stocks are lagging (-0.35%).

The dollar is higher this morning, which is weighing on commodities. Oil prices are down a bit to $81.65, and gold prices are hovering just below $1360.

There was continued M&A action over the weekend (NU for NST, and STJ for AGAM). Asian markets were lower overnight, but Europe is higher this morning.

The 10-year yield is lower to 2.52%, after a big spike higher on Friday, right up to its overhead 50-day average. The volatility index (VIX) is 4% higher to 19.80, which is still a pretty low absolute level.

Trading comment: We are now in the thick of earnings season, which will color the days action from day to day depending on how the big stocks earnings come in. Last week, GOOG knocked the cover off the ball and surged higher, taking the sector higher along with it. Today we will hear the highly anticipated report from Apple (AAPL). And while everyone knows they should report a good number, the question will be how much of the good news is already discounted in the runup of its stock prices last week. Of course, regardless of today's reaction, I still believe AAPL is going higher in the near future.

We will also hear this week from IBM, Goldman Sachs, BofA, Wells Fargo, Amazon, and Chipolte, to name a few. So get ready. No rest for the weary.

long AAPL, BAC, GOOG

Will Early Pullback In Stocks Last?

The market pulled back this morning, with the S&P 500 briefly touching the 1155 level. But as we have been saying of late, buyers quickly stepped in and put some money to work, such that the Nasdaq is already positive and the SPX is down a little over a point as of this post.

Among the sector ETFs, consumer discretionary (XLY) and financials (XLF) are bucking the weakness, while energy and industrials are lagging.

In corporate news, Pfizer (PFE) said it would buy King Pharma (KG) for a 40% premium. Not bad. And chip bellwether Intel (INTC) reports after the close today.

We also will get the minutes from the last FOMC meeting, which always has the potential to move the market one way or another.

Asian markets were mostly lower overnight, except for China which bounced +1.2%. The dollar is up a bit, which is keeping a lid on commodities so far. Oil prices are down a bit near $82.30, and gold prices are also flattish around $1352.

The 10-year yield is down a touch, just above its 52-week highs, and hovering at 2.37%; and the VIX is up +2.2% to a still very low 19.38.

Trading comment: Frustrating action for anyone who isn't fully invested and looking for a pullback to buy. This is also a tough juncture as earnings season heats up starting tonight. As companies report, there will be more volatility in the reactions to earnings. I am going back to look for stocks who reported strong quarters last quarter, in the hopes that business momentum carried into the current quarter and portends more upside ahead.

The "cloud" stocks are bouncing hard today (FFIV, CRM, VMW, AKAM, RVBD, etc), and their action bears watching. These companies are still growing fast, so hopefully we are getting into a situation where expectations for the stocks have been lowered just ahead of earnings, and as such the odds for a positive reaction to earnings has improved.

long FFIV, VMW

Monday Morning Musings

The markets are slightly higher in early trading, despite a real lack of economic and corporate datapoints. Of course, earnings season heats up this week with some big names reporting, like Intel, JP Morgan, and Google. Should be interesting.

Asian markets were up nicely overnight, led by China's +2.5% surge. Japan was closed for a holiday, but the Yen continued to climb to 15-year highs. Has anyone noticed how many holidays they have in Asian where the stock market closes? Today is Columbus Day, and our bond market is closed. I think we need some more stock market holiday's.

The volatility index (VIX) is moving to new multi-month lows, down -6.95% below the 20 level today (19.27). Investors seem to want to buy any dips, and maybe some new money will come in off the sidelines if the Dow can remain above the 11,000 level that the media loves to mention.

The dollar is flattish, while oil prices are down a bit to $82.25, and gold prices are off slightly near $1344. While the price of gold certainly appears extended, the competitive devaluation process of central banks trying to push their currencies lower to help boost export demand seems to be supporting the notion gold wanting to go higher.

Trading comment: Nothing really new in terms of our recent market comments and thought process. We're staying long, but still have some cash ready to take advantage of a pullback. Lately, pullbacks have only been quick 1-2 day affairs, so you really have to have your buy list ready to pull the trigger.

Today I am seeing a few more small breakouts from stocks that have lagged, with the likes of CSTR, ATHR, STEC, BRCM, BLK, etc. Semis are beginning to play catch up also, while retail stocks have continued to climb in the face of investor doubt.

long ATHR, BLK, CSTR, GOOG

Desire To Be Invested Trumps Today's Jobs Report

The S&P futures were lower before the open this morning, and then we got a jobs report that appeared worse than expected. Nonfarm payrolls declined -95,000 in September, which is well below the expectations for a figure closer to unchanged.

Maybe it was the fact that private payrolls increased 64,000, or maybe it was that the big decline was due to government workers declining by 159,000 (census workers), but I think the real culprit was what I have been talking about and that is the number of folks who are underinvested in this market.

The desire to put money to work and buy any dip caused the market to bottom in the first hour of trading, and the dip was minor, and from there it was a steady rise into the close. The S&P closed at 1165, but the real headline will be the Dow closing above 11,000.

Among the sector ETFs, materials stocks (+1.97%) led today's action, followed by energy (+1.25%). Safety stocks like consumer staples (+0.21%) and utilities (+0.31%) lagged. But the biggest move of the day was in the ag space, after the USDA released its October supply/demand report which was very bullish for corn, etc. The ag etf (DBA) spiked +6.25% today, quite a move. Many ag stocks vaulted to 52-week highs.

Commodities were also very strong, with oil finishing higher at $82.85 and gold closing at new highs at $1346.50. The dollar was weak today, which likely helped.

Bond yields were weak, with the 10-year yield closing out the week at 2.38%; and the volatility index (VIX) fell -4% to 20.71.

Trading comment: Many of the market leaders that were sold off earlier this week have bounced back nicely. The FFIV/VMW/CRM complex also bounced, but I still think the huge volume we saw there means that we are in for a longer period of consolidation. I think the market will remain strong into year-end, of course there are always pullbacks, so it will be interesting to watch for what group takes the reigns from the "cloud" stocks and lead the market from here. Industrials and materials have been heating up, and it is really only the financials that continue to show unimpressive moves.

Happy trading, and have a good weekend.

long FFIV, VMW

S&P 500 Holds Recent Gains, Despite Tech Selloff

Yesterday's action was a bit odd. The S&P 500 held its ground following Tuesday's big rally. Big tech stocks like CSCO, INTC, QCOM also fared well, while many of the recent leaders in tech (FFIV, CRM, VMW, AKAM, RVBD, etc) had huge selloffs on very high volume.

Moreover, the VIX barely moved yesterday, so many hedges weren't really working in terms of trying to hedge against a selloff by using broader market gauges. The high volume readings in those names is a bit disconcerting, so it will be important to see how they trade going forward, if they begin to build new bases, if they can get back above their 50-day lines, etc.

The jobless claims were down 11,000 over last week, which isn't bad. And the Monster Employment Index rose for the 8th consecutive month, posting +16% yr/yr growth. While that's a bit of a slowdown, it is still a positive datapoint in terms of the employment picture at small and mid-sized businesses.

The dollar is firm today, which is weighing on commodities. Oil and gold were up sharply yesterday, so their declines today still leave them up near $83 for oil and $1343 for gold.

The Bank of England held rates at 0.5% and the ECB held their rates at 1.00%. Asian markets were mixed overnight, with the Yen rallying to new 15-year highs.

The 10-year yield broke down to new lows yesterday, and is hovering near 2.39%; the VIX is barely higher today, trading at 21.68 and not predicting a pickup in volatility right here.

Trading comment: I have warned recently that many of these leading stocks looked extended. Yesterday's pullback was sharper and on higher volume than I would have liked, but as they say you have to trade the market that is, not the one you wish for.

I will continue to monitor these names for buy opportunities. How they react in the days and weeks following yesterday's selloff will be a key tell.

long CRM, FFIV, VMW

Quantitative Easing In Japan

The markets are sharply higher in early trading, following a better than expected ISM Services report. Of course, Asian markets were higher overnight, and Europe was up this morning, so investors were already in a buying mood before the economic report came out.

The September ISM Services Index came in at 53.2 vs. expectations for 51.8. That was the only real news this morning, as corporate data is relatively light.

There was also some overseas news, as the Bank of Japan too further steps to boost liquidity in its country. The BoJ reduced interest rates (which isn't easy when rates were already 0.1%) and created a 5 trillion yen fund to boost liquidity via bond and asset backed securities purchases.

Japan really needs to halt the rise in the Yen (see chart below), which makes their exports more expensive in the global market. You can see that after that initial drop in the Yen when the central bank intervened in the markets, it has since moved right back up near its highs. We will have to see if these additional monetary steps can achieve their desired effect.

In Australia, the reserve bank left its main interest rate unchanged at 4.5%, halting what had been a series of rate hikes.

The dollar is lower again, which is boosting commodities. Oil is all the way up to $82.20, and pretty soon we are going to start hearing complaints about the high prices from industries that use oil. Gold is also at new highs above $1331, ditto for silver.

The 10-year yield is flat near 2.47%; and the VIX is moving sharply lower this morning, down -6% to 22.06.

Trading comment: Yesterday I mentioned that dip buyers could emerge quickly, and it looks like that is exactly what we are seeing. The S&P 500 briefly touched the 1131 level yesterday, which has been acting as support lately. That level held once again, and this morning the SPX zoomed right back up to the 1150 resistance area. Currently, the SPX has broken above that resistance, and is trading at 1155. If this level holds, it will be a new breakout, although the SPX did briefly trade at 1157 on the morning of 9/30. So that is probably the key level to watch.

We are now getting into earnings season, which will surely add volatility to individual stocks reporting earnings. Yesterday Mosaic (MOS) reported mixed results, but its stock is up +3.7% this morning.

long MOS

Monday Morning Musings

The market is down just below the flat line in early trading. Asian markets were mixed overnight, with China still closed for a holiday. European markets were lower before the open.

Over the weekend, there were a handful of M&A deals in biotech, tech, and energy. I see this trend continuing as companies have a lot of cash on their balance sheets, interest rates are extremely low, and valuations of potential takeover targets remain reasonable.

Among ETFs, defensive sectors like utilities (+0.40%) and consumer staples (+0.11%), while energy (-0.90%) and basic materials (-1.10%) are lower.

The dollar is bouncing a bit today, which is weighing on commodities. Oil prices are down to $81.30, and gold prices are off a bit near $1313.

The 10-year yield is lower again to 2.48%; and the VIX is +4.0% to 23.40, which is right about where the 50-day average resides.

Trading comment: The market is working off its recent overbought condition, mostly by trading in a sideways fashion again. It still feels like bears are unable to gain much traction in terms of knocking the market lower, and underinvested bulls are looking to buy any dips. Market leaders continue to hold up well, and hopefully a few will offer good buy setups at some point. MELI is one that I am watching, as it is pulling back to its 50-day average today. AKAM is also getting close to its 50-day. And Ford (F) looks like its breaking out today from its recent consolidation.

long F

Q4 Begins With Another Stall at SPX 1150

The market was again strong out of the gate this morning, but similar to yesterday, the early strength attracted selling and the gains appear to be fading so far.

The economic data was mixed this morning: personal income and personal spending were both slightly ahead of estimates; the Univ. of Michigan Consumer Sentiment survey came in at 68.2, up from last month's 66.6 reading; but the September ISM Manufacturing survey which many people watch slipped to 54.4 from 56.3 in August. This last datapoint seemed to be the one that opened the door to this morning's selloff.

Corporate news has been light, but Accenture (ACN) stock is higher after reporting better-than-expected earnings.

The dollar is lower again, which is boosting commodities. Oil prices have topped the $80 level (currently $81.25), and gold prices are hitting new highs again near $1320.

Asian markets were mixed overnight, with China closed for a holiday. European markets were also higher this morning. The 10-year yield is flat near 2.51%; and the VIX is also flat near 23.60.

Trading comment: As you can see in the chart below, the S&P 500 once again had trouble getting above the 1150 level (pink line). This level is shaping up to be pretty firm resistance, and I think it is becoming likely that the market will back off from these levels and consolidate a bit before ultimately rallying again and breaking above 1150.

I have noticed a change in the last couple of days, and that is that the market has opened very strong, only to selloff and close weak. We still have a long way to go today before the close, but the early pattern is shaping up a lot like yesterday. This is much different action that most of September, when the markets would often open very weak, only to rally and close strong on the day.

I have often said the hallmark of strong markets is the ability to open weak, shake it off and rally into the close. When the opposite occurs, it is a sign that the rally is running out of steam. So I want to be patient, and wait for more of a pullback from here. I have also noted several times that many of the leading growth stocks are extended and in need of pullbacks as well.