Though Thursday’s strength isn’t a big surprise to us (we’ve been bullish based on the stunning TRIN reading for a while), the ridiculous 3.0% run for the day puts the market right back into the same fire it’s been jumping into for several days now - overbought, and a hair away from a salvo of profit-taking.

We’ve mentioned it before, but I bears repeating now…. pacing is everything. If it were 1999, or 2007, a 3% pop would be nothing - easily followed the next day by more buying. This is mid-2010, and though the Micro Cap Press analytical staff believes we’re still in a bull market, that’s not a widely-held opinion. And, if the bulk of investors think we’re in a bear market, we may as well be in one…. their behaviors will stifle the market to the point where they create the very bear market they fear.

That’s the long way of saying there’s a good chance traders will start taking profits after the 3% runup. If it were just 1% or so, it wouldn’t set up that kind of selling potential. In a tentative environment like this one though, a 3% surge a big liability.

Only Friday will tell us what investors are really thinking, though heading into the weekend will make it even tougher for the bulls.

In any case, we wanted update you - once again - on the breadth and depth charts we’ve been monitoring for quite some time now. Things turned for the better on Thursday.

In simplest terms, even though the total volume for Friday was just average (especially considering the size of the jump), we saw bullish volume come in well above the recent average, while bearish volume came in well below the recent average. The same goes for breadth…. the number of advancers on Thursday was well above the recent norm, while the number of declines was well under the recent average.

Here’s a chart of that data for the NASDAQ, though the NYSE’s (with the S&P 500 Index) looks pretty much the same. Notice how the bullish moving average lines (green) ‘curled higher, as the bearish averages (red) ‘curled’ lower.

Now, as we’ve described and looked at before, what we really want to see here are crosses of those moving averages as a hint that the true breadth and depth trend has changed from bearish to bullish. We don’t have that yet, but we are visibly closer. Here’s the overlaid chart.

Bear in mind that, as is the case with any moving average, this is a lagging indicator. That can be advantageous, or disadvantageous (or both) depending on the situation. Either way, we don’t have the crossovers we want to see yet. But, we’re still actually bulls at this point in time. We’ll just be more bullish when/if those crosses are made.

There’s no way that news television, your favorite newspaper, or any mainstream market-commentary website would ever touch this kind of data or chart, even though it works amazingly well. Stop missing out - sign up for the free Micro Cap Press newsletter today.