The market has changed; IMO
Recently, we were in a trading range where we went from over bought to oversold in just a few trading days.
As of the past few days, we see minor weakness after a big rally and a overbought number on the SPY goes from 3.63 to 3.08 with the markets selling off negligibly. This has been a consistent characteristic of full on rally mode since 2008.
In other words we reach a near over bought number and then a small pullback entices new buyers to come in and changes The PPT reading to a not over bought number.
This is indicative of true buying within a rally as opposed to just short covering.
So be careful trying to short this market. It is likely we need an external shock or consistently horrible earnings to turn this scenario around.
I could be wrong, as this is an early, early observation, but this was a consistent behavior from the lows of 2009 to the highs of 2011.
It is also interesting to note how this behavior correlated with many calls over the past 10 trading days that we had reached the lows for the year.
GLT
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Woodshed has some good analysis that seems to correlate with my assumption:
http://ibankcoin.com/woodshedderblog/2011/10/10/sp-500-beneath-the-50-day-avg-for-more-than-50-days-now-above-what-now/