I smell a rat. Several days ago, The Wall Street Journal published a massive selling-on-strength number for the spyders, usually an indication that the big boys are leaving town. Dumb money sentiment as published by Sentimentrader.com has been running a bit on the hot side. Cycle analysis suggests the market is due for a correction, and finally, many short-term indicators were sitting at overbought to very overbought levels coming into today's action.
So what happens? The market gaps higher this morning to a new bull market high. Forgive my cynicism, but I can't help thinking the big boys are using the tax cut news to run buy-stops, create a buying frenzy, and unload into unsuspecting hands. If the stock market fades today and closes red, the risk of a significant correction will be great, in my opinion.
The fact that commodities are also experiencing a serious bout of weakness off the morning highs lends credence to the idea of an impending correction. In fact, gold is ripe for an intermediate cycle decline, and the heavy weakness seen in mining shares may be leading the way down.
Of course, the session is not yet complete, but we have some interesting (and ominous) action to observe.