Odds are due for a short-term pullback

By Lawrence G. McMillan

The market responded to a number of factors on Monday to put together one of the strongest days of the year.  Perhaps too strong (for example, advancing volume on the NYSE was 34 times that of declining volume!).  It was yet another "90% up day" and now there have been three such days without an  intervening "90% down day."  Odds are due for a short-term pullback.  However, once that gets out of the way, we would expect higher prices in line with the improving technical indicators that we mentioned yesterday.  It was interesting to see the still-bearish opinions on CNBC were dominant (or at least that's what they are showing us).  Very few people were citing sentiment indicators, such as put-call ratios and spike peaks in VIX as reasons for the rally.   

Many technicians seem to be obsessed with resistance at the 1200-1205 level, and not much else. $SPX did manage to close slightly above that level, but is trading back below it overnight, as the S&P futures are down 6 points or so...

To read the rest of McMillan's market commentary from last night, subscribe to The Daily Volume Alerts.