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So Is This It For Our Rally?

The S&P 500 rose in 6 of the last 8 trading sessions for a gain of 8.2 percent. But today's news, with several companies indicating that earnings will be even worse than lowered expectations, has some of the hallmarks of at least a short-term trading top.

Consider that bullishness has been increasing recently:

1) $10 billion has flowed into equity funds in the last four days

2) For the first time since August, more financial newsletter writers are bullish than bearish.

Money often goes into the markets during tops of some type, and high levels of bullishness have also often corresponded with market tops.

Consider also that the major problems of the last few months have not gone away:

1) Earnings guidance remains poor and today is worse than even lowered expectations

2) Corporate/insider buying very low

3) Withholding taxes way down

4) Little new money going into market

One important point about today's trading: volume is not picking up. In other words, there has not—as of midday—been any sign that selling pressure is increasing. Rather, it is an absence of buying interest that is causing the market to drop—so far.

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