We are finally starting to see some emerging signs that the rally is being embraced. There was speculative action in many small cap stocks yesterday. Rydex traders finally "started" moving back to the bullish side yesterday and the CBOE equity only reading was low.
Early last week we also saw signs that investors were warming up to the market but the market took a small hit and investors quickly moved back to the bearish side. I would prefer if the market kept rallying and we reached extreme optimism. I find it much easier to trade at the extremes and the resulting moves are stronger. As an example, last week's move lower was weak because we never reached extreme optimism.
We are seeing a gap up this morning right into resistance at 1120 on the S&P 500. I previously believed that level would cap the market but am no longer so sure. We could see the bears attempt to defend that level. I would not be buying into this gap up.