S&P Testing Overhead 50-day Resistance

Yesterday's action in the market was quite bullish. The market opened lower and sold off modestly, but then the selling began to dry up and the market started to climb. By the end of the session, the market had recouped all its losses and closed in positive territory.

The positive sentiment continues this morning, despite some negative headlines, and the SPX is currently trying to break above its overhead 50-day average at 1304. This would be a bullish technical sign.

The market is ignoring a weak durable goods report this morning, which showed orders for February fell 0.9% when a gain was expected. Coupled with yesterday's housing numbers, February is looking like it was a weak month, but hopefully will mark a low point.

Commodities are continuing to move higher, with gold prices up to $1446, and silver prices up for a 5th straight day to new highs. Oil prices are also higher again, above $106. Yesterday, Leon Cooperman said that he thinks the consumer and the economy should be okay unless oil tops $125, at which point high oil prices could become problematic.

Asian markets were mixed overnight, with no real new news. Europe is higher this morning, despite a raft of negative news there. Moody's downgraded about 30 banks in Spain, while the Portugese PM resigned after failing to pass austerity measures there.

The 10-year yield is higher at 3.38%; and the VIX is falling -5.2% back down to 18.15, signaling traders expect a decline in market volatility.

Trading comment: If the S&P holds up today, and closes above its 50-day, it would be the first sign that this correction is nearing an end. The next step is to find those stocks that have held up the best during the correction. These are the stocks with the highest relative strength currently, and should provide leadership in the next leg higher.

I think the baton has been passed from many of the cloud and networking stocks, with lots of energy and materials stocks moving to the forefront. I started putting money to work yesterday, and will do more so today. Good luck.