The strength of today's rally came as a bit of shock, at least it did to me. Much of the movement in the Dow Industrials (DJIA) was due to the surge in shares of Visa (V) on the heels of a much better than expected earnings report. Sure, Visa accounted for a significant portion of the upside in the Industrials, but it couldn't account for the rallies in the Nasdaq, S&P 500 (SPX), nor the Russell 2000 (RUT). While the S&P and the Dow Industrials flirted with recent resistance levels (17200 for the Dow and 2000 for the S&P), they couldn't manage to close above them. Only the small-cap Russell was able to best its 1150 resistance level, and that's one plus for the bulls. The second mark on the plus side is that the VIX managed to close the day under 15, something it couldn't accomplish yesterday.

However, the bears aren't without their own arsenal. There are several compelling factors in their favor:

1. The Dow Transport Index (DTX)--a leader in market direction--was the only major index to close the day in the red. A break back below 860 (8600 on some data services) could mean a reversal in direction for other indices.

2. Although today's overall market action was to the upside, the Trin (Arms Index) was solidly in bear territory. (A reading over 1.0 is considered bearish since, in general, there's more volume flowing into declining issues rather than into advancing ones.) While the Trin sometimes gives a false reading, in general it's quite reliable as a short-term indicator of market direction.

3. While investors are piling into the stocks of those companies reporting better than expected earnings, they are ignoring the ones that don't have some sort of catalyst behind them. Why? One reason is that much of the market is over-valued and there are few bargains to be had.

One of the places that we've been mentioning where investors are still finding value is in utilities, and those are precisely the issues that dominated today's New Yearly Highs list. The reason? The P/E's are not yet over-extended (most are in the 15-20 range) and they pay a decent dividend (in the 2.5%-3.5% range--a whole lot better than bonds!). This inflow of funds was reflected by today's 2% rally in the Utility etf (XLU) which shot up to hit a new all-time high (since 1999 inception). (Note: A 2% move is a big one for XLU.)

Here are some of the more technically compelling utility names that populated today's New Highs List: Integrys (TEG, $73), Xcel (XEL, $33.5), DTE (DTE, $82), Ameren (AEE, $42.6), California Water (CWT, $25.5). All of these appear to have more room to rally and conservative investors may wish to add to their positions. Note that all of these issues offer options making them good candidates for covered call strategies. (Just remember not to write the option close to the ex-dividend date!)