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.