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Exagerated Exuberance or Not

With the current bullish trend the question continues to arise as to whether or not the trend is grounded in solid fundamentals or hopeful expectation that could be described as "exaggerated exuberance".  Better than expected events from Corporate earnings to Economic data, while still on uncertain ground in many instances, continue to push resistance levels of the 3 major market averages.

Interestingly enough, sentimental indicators that include put/call ratios and the VIX validate the technical uptrend and remain in very bullish territory.  Options can be used to provide insight on market direction/sentiment and today's activity on the SPY for the Months of May and July are very bullish not just indicated by Call volume but by Put volume as the apparent contract originators seem to be coming from sellers, again suggesting bullish expectation.

CAT and TXN earnings numbers beat expectation and is very likely to help the Bulls find continued traction.  Today, concerns regarding impending banking regulations muted the uptrend.  Could this have further negative impact on market direction?  Possibly.  Coupled with the GS issue and continued debt concerns in the EU, the markets may, I emphasize may, find a reason to book profits short-term.  At the moment, however, the investment community continues to look for reasons to buy.

Summary:  Stick to stagnant to bullish strategies, short-term.



Disclosure: No positions