The market saw a huge gap higher this morning, but has essentially been going sideways since. The issue is whether we are actually poised to break above that pennant on the s&P 500 that I have been discussing over the past few days. The key level appears to be at 1200, and we are currently a few points below. Individually, many stocks I am seeing are well off of their morning highs, even though the broad market has not seen a big fade. Thus, I am watching closely to see in which direction those divergences resolve.
I also have my eye on some of the airlines, as they have been badly beaten down in recent months. Moreover, they are squeezing much higher today, even though many traders considered shorting them after Hurricane Irene to be an easy, lay-up trade. I suspect that they can squeeze much higher.