I'd describe today's bullish stock action as that of bears understanding the risk they were taking ahead of yesterday's Cisco Systems (NASDAQ:CSCO) $15.82 +20.9% earnings. Bears were counting on a disappointment, while bulls, well bulls were "hoping" for some type of good news.
However, for technology stocks, the recent declines in the NASDAQ-100 Bullish % ($BPNDX) to 17% hinted that bears carried the bulk of the risk, and the "lack of disappointment" has bears rushing to cover and bulls looking for some bargains.
Earlier today at 11:00, we were wanting to monitor the "more important" Morgan Stanley Cyclical Index (CYX.X) $578 +2.16% to see if this group was able to show enough strength to get back above its rolling 50-day moving average. That has taken place and the next level of resistance that equity bulls really need to see cleared is the 580 level. So far so good for bulls, but still some work to be done here.
NASDAQ Composite Index Chart - Daily Interval
The broader NASDAQ Composite (COMPX) didn't reach the lower end of its regression, mostly due to the more bullishness that had been taking place in the smaller caps. The near-term relative highs near 1,700 will most likely find some resistance as shorter-term bullish trader take some nice gains from the recent lower risk levels and short-term oversold levels. If the deeper cyclicals aren't able to break to new highs, look for bears to come back in with some short selling and be leveraging off the 1,750 level of retracement and downward regression from trend.
Breadth is positive
It would be expected that the broader market rally today is followed with strong breadth. On the NYSE, advancers lead decliners by a 17.8 to 12.9 margin, while the NASDAQ Composite shows advancers with a 21.8 to 11.7 advantage over decliners.
There have been 85 new highs on the NYSE compared to 15 new lows (Dynegy (DYN) -19%), and the NASDAQ is showing 107 stocks hitting new highs, with 45 trading at new lows.