The markets are overbought but this can continue longer than one might expect. Perhaps dangerously, investor sentiment remains universally bullish. It’s still a QE dominated market as liquidity is pushing markets higher even as earnings overall remain uninspiring.

For our part we took some profits Monday while the basic core of our main portfolio remains intact. On the downside Boeing (BA) continues to weaken with Dreamliner groundings and Caterpillar (CAT) is going to take a $580 million dollar charge after being hoodwinked by Chinese accountants—both held back industrial sector (XLI). Johnson & Johnson (JNJ) disappointed driving consumer staples (XLP). Travelers (TRV) reported good earnings which helped lift financial sector (XLF).

Earnings from DuPont (DD), despite falling 70%, helped push the materials (XLB) sector higher. This is how QE trumps flat earnings.

Google (GOOG) reported earnings after the close that cheered investors although revenues seemed to miss. IBM (IBM) reported earnings that slightly beat estimates. Both stocks were substantially higher in after hours trading.

Economic news wasn’t inspiring as the Chicago Fed National Activity Index fell (.02 vs .28 expected & prior .10); Existing Home Sales fell missing estimates (4.94M vs 5.1M expected & prior revised lower from 5.05M to 4.99M easing the miss); and, the Richmond Fed Mfg Survey plunged (-12 vs 5 expected & prior 5). This disappointing data just stimulates bulls to thinking the Fed won’t take its foot off the gas pedal anytime soon. Domestically bank deposits in the 4th quarter soared to $433 billion per Nomura Securities.

Overseas the German ZEW economic expectations index soared (31.5 vs 9.5 expected) and the Bank of England said it would be rejoining the money printing (QE) operations. This is stimulative to the ongoing “currency war”. And to make matters bleak, global unemployment per the International LabourOrganization’s Global Employment 2013 trend asserts unemployment nears 200 million. (That’s a lot of food stamps!)

The dollar (UUP) was slightly weaker and gold (GLD) rose modestly. Commodities (DBC) were led higher by oil (USO) and natural gas stocks (FCG). Stocks are still moving higher glacially day by day on still light volume. Bonds (TLT) seemed well bid.

As indicated volume once again was light and breadth per the WSJ was positive.

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