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Bullish Momentum Building for the Herd: Dave's Daily

Bulls want to put the euro zone in the rearview mirror and change the focus on earnings and the calendar. Typically, the fall is when we do get the best opportunities to be long. The problems have been well publicized and now portfolio managers are in the mood and mode to make their year.

Friday's Retail Sales, only marginally better than expected at 1.1% vs .8% expected and .6% ex-autos vs .4% expected, got bulls fired up. On a day like Friday and with momentum building it's easy to ignore the poor Consumer Sentiment data (57.5 vs 60 expected and prior at 59.4) and higher import prices (.3% vs -.5% expected and prior -.2%). It might even be asserted higher import prices may account for a portion of higher Retail Sales data but let's not waste time on thoughtful details when the tape is on fire.

Google's (GOOG) earnings beat (they don't provide guidance so analysts just guess) from the previous evening combined with news Apple's (AAPL) report that 4 million new iPhones were sold got motivated bulls and tech. Further with tiny Slovakia back on board with the euro zone bailout everything looks just fine right? Sure Fitch and others are in a bank and country downgrade mode but they're always late anyway and just playing catch-up so the thinking goes.

So, let's get with the program all you "sheeple" since stocks are breaking out of their trading range. The sprint to 2012 is on and bulls are determined to make a splash with whatever assets they have left.

We're also revisiting the previous weak dollar, strong stock market theme that was much in play until euro zone issues were front and center. Gold and commodities rallied as reflation is now the better option for authorities. Meanwhile, whatever money is on the sidelines much of it is parked in bonds. With selling there, it's logical to conclude switching to stocks is occurring.  

Volume was quite light for this rally. Let's face it, so many investors have left the market there isn't much left to trade away from the prop desks, HFTs and hedge funds. But again, light volume was a signature of previous rally days prior to the June turnover. Breadth per the WSJ was quite positive and we're no doubt short-term overbought again.

ETF Digest subscriber and friend David Hurwitz provides us better breadth and volume detail as noted below:

You can follow our pithy comments on twitter and join the conversation with me on facebook.

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