Trichet Doesn't Bite At "QE2" in Europe

The market is adding to yesterday's outsized gains, which is a bit surprising but likely speaks to the underlying strength of this rally. The Dow gained a whopping 250 points yesterday, with the S&P 500 up a similar amount on a percentage basis. The SPX rose further to 1217 this morning, and is now just 10 points away from its recent 52-week high (1227).

Asian markets were higher overnight, with Europe higher this morning. The ECB left rates at 1.00%, but Trichet made no mention nor hinted at any plans to extend bond purchases. Nonetheless, the euro is bouncing for a second day at the expense of the dollar.

The lower dollar is helping boost commodities. Oil has risen further to $87.33, while gold has rallied above $1390.

In economic news, pending home sales for October came in much better than expected, spiking +10.4%, which is the best move in 10 years for this datapoint. Also, many retailers have reported same-store sales for November, which have been mostly solid.

The 10-yr yield is higher again today, and touched the 3.0% level earlier. As for the volatility index (VIX), it's down another -8% today below the 20 level to 19.66.

Trading comment: Although volume didn't rise enough yesterday to qualify as an accumulation day, breadth was impressive. New highs expanded nicely, and up volume on the NYSE totaled 93% of total volume.

The leaders continue to distance themselves from the pack, so no reason to shift away from that strategy. I will continue to buy the dips.