There isn't any hard news regarding a "fix" for the euro zone from Sunday or even a likely plan done by Wednesday. It's off-putting to say solutions are complex but that's most of what we're hearing.

In the meantime bulls are jumping on some good data from China where the PMI rose from 49.9 to 51.1 and Japan where exports surged. Also in the U.S. there was more M&A activity than is reasonable to summarize here. The earnings lead was Caterpillar (CAT) where, despite earnings views being lowered three times over the past quarter, earnings beat estimates of $1.63 posting $1.93. Higher revenues for the company came from an increase in mining equipment sales.

Strong stock sectors were tech (XLK), financials (XLF), and materials (XLB) to name a few. In tech semi's (SMH), internet (FDN), software (IGV) and networking (IGN) were particularly strong. The dollar was once again weaker on rumors of French repatriation of dollar assets to assist with domestic bailouts. With China's report base metals (DBB) and copper (JJC) were also sharply higher along with crude oil (USO). Meanwhile bonds were weaker overall with the stock market rally. It doesn't hurt when bulls hear the Fed imply QE3 is still on the table.

In the losers department were cast-offs like American Airlines (AMR) and Eastman Kodak (EK) where bankruptcy concerns remain elevated. Kodak was a DJIA stock at one time. It shows what happens when companies are dropped from the index which has been done with more frequency lately. The index is price-weighted so stocks like CAT have a bigger impact as their prices surge. Currently there are a half dozen or so firms (IBM, CVX, MMM, MCD, UTX, and XOM) that can really push the index around and perhaps mislead investors. This is why most experienced investors focus on the broader S&P indexes, which while price weighted, give a broader view.

Volume was light compared with recent periods while breadth per the WSJ was quite positive.

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The NYMO is a market breadth indicator that is based on the difference between the number of advancing and declining issues on the NYSE. When readings are +60/-60 markets are extended short-term.

The McClellan Summation Index is a long-term version of the McClellan Oscillator. It is a market breadth indicator, and interpretation is similar to that of the McClellan Oscillator, except that it is more suited to major trends. I believe readings of +1000/-1000 reveal markets as much extended.

The VIX is a widely used measure of market risk and is often referred to as the "investor fear gauge". Our own interpretation is highlighted in the chart above. The VIX measures the level of put option activity over a 30-day period. Greater buying of put options (protection) causes the index to rise.

Continue to Concluding Remarks

No positive news from Europe over the weekend other than they're "talking". But bulls have time to trade before what might be a Wednesday deadline or not. The more time they can buy the more fun bulls can have. That said, the NYMO is much overbought so I'd expect a reaction soon.

Home price data is available Tuesday along with Consumer Confidence. Earnings reports will continue to flow with MMM, American Eagle Outfitters, DuPont, Illinois Tool Works, Molex, Office Depot, U.S. Steel and many more.

Let's see what happens.

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Dave Fry is founder and publisher of ETF Digest, Dave's Daily blog and the best-selling book author of Create Your Own ETF Hedge Fund, A DIY Strategy for Private Wealth Management, published by Wiley Finance in 2008. A detailed bio is here: Dave Fry.