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Last Half-Hour Sell-Off Trims Day's Gains

|Includes: Bank of America Corporation (BAC), DIA, IWM, MS, QQQ, SPY

Slightly disappointing economic numbers failed to trip up the market at the open. GDP came in slightly below expectations and jobless claims were disappointing. Volume rose on the NASDAQ by a hair and dropped over on the NYSE. Plenty of stocks are holding up including the banks lead by big moves from BAC and MS. The last half hour of the session was not desirable for stock bulls. Over the past few sessions sellers have been dominating trade push stocks lower at the close. This may turn out to be nothing, but it is something to keep an eye on. Not a terrible day for the markets, but one that could have been much better.

Sentiment indicators continue to be off extreme levels with the exception of the II survey. Even though the survey respondents for the II survey were less bullish they still remain historically high. Bears remain below 20% and have stayed around 20% for quite some time. However, the AAII survey showed a bigger drop in bulls closing the week at 36% while bears are at 30%. NAAIM survey showed managers were bullish, but less bullish than the week prior. Sentiment certainly isn't screaming a top signal, but the bullishness on CNBC remains very high. Price action still favorable for the longs and this is what we want to see.

Tomorrow's end of the month trading will see volume spike at the close of the session. It will be interesting to see how the volume run rate will be prior to the final hour of trading. There are plenty of stocks holding up exceptionally well in this market. They are certainly signaling this market has more room to run to the upside. This is not a guarantee we go higher, but certainly we have signs we can go higher.

On a longer time frame we do remain in an overbought condition. We can remain here for quite some time and with short-term indicators like the McClellan oscillator showing oversold conditions a bounce here into new highs wouldn't surprise us. If we do fail here we can cut our losses and go with the flow. Cut your losses short and ride your winners.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.