Technical Picture - New Recovery Highs (Again)

Today's extension to fresh 11-month highs reflects continued momentum/short-covering off of yesterday's reversal higher, after today's initial pullback proved once again to be short-lived. The dollar initially tried to rally (early weakness in S&P), but couldn't hold. Bernanke's well quoted statement midday "from a technical perspective, the recession is very likely over at this point" probably helped the bulls push prices higher. Leadership was provided by commodities and industrial related groups, with a reversal lower in the dollar fueling gains in energy and metals, and new frost concerns driving the agchem complex sharply higher (see my POT trade below).

Many traders, like myself had been anticipating a more meaningful market correction, but it just hasn't materialized, as pullbacks continue to be short and shallow. Despite the overbought view of the markets, we will likely continue to drift higher until a catalyst can come up with the power to turn things around.

$USD vs. SPX sums up the technical picture.