The market continues to defy gravity, and every small attempt by the bears to push it down – even in this moderate-volume trading environment – is swatted aside like a pesky mosquito and limited to one-day non-events. And now the market has its sights set on new 2010 highs, and it might just get there before some much needed profit-taking and support-testing sets in.

The market continues to try to suck in bears who are itching to short a rally that is long on optimism but short on volume and fundamental underpinnings. But each time it appears that a correction of significance is ready to start, a bid arrives with the slimmest of justification to sends the market to new heights. Despite market exuberance, my own technical analysis of the charts and Sabrient’s SectorCast-ETF fundamentals-based quantitative ranking of the ten U.S. sector iShares are both telling me that there is still much to worry about.

After last week’s Sector Detector article in which I talked about the “relentlessly strong September” making the market quite overbought from a technical standpoint, it looked like the market was going to waterfall into a healthy correction on Thursday. But alas, the bulls pulled a rabbit out of their hat and closed the week with a flourish.

A relentlessly strong September is making the market quite overbought from a technical standpoint. So much for September being historically the worst month of the year for stocks. But it now appears to be at a crossroads. And Sabrient's quantitative SectorCast rankings are even more defensive this week.

Bulls put up a valiant offensive in the last 20 minutes of trading on Tuesday to push the Dow Jones Industrial Average (DJX) back above the 10,000 level as the month of August came to a close. For the last six days of August, bears either succeeded or gamely tried to penetrate this psychologically important level intraday only to be repelled by the bulls.

As I pointed out back in June, cash on hand among S&P 500 companies has been at record levels, and up 25% over the same time last year. One would presume that such cash levels would eventually be used for share buybacks, M&A, or dividend increases – all of which would impact the market favorably.

The market found pleasure in manure today. When Australian miner BHP Billiton (BHP) proposed to acquire Canadian fertilizer maker Potash (POT), the market saw this as an opportunity to soar. Perhaps traders took it as a sign that corporate cash is ready to be deployed…or perhaps it was simply a low-volume oversold bounce on the flimsiest of catalysts.

The SPY sold off early today in advance of the FOMC decision, but bounced strongly from the support line of the bearish rising wedge formation, which also is quite close to its 200-day moving average. Just as I said last week, all market indexes appear a bit extended and ready to pullback, but the bulls are game. Put/call ratio and volume is low.

The SPY finished the month of July up a robust +7%, and then started the first day of August by tacking on another +2% gain. All market indexes appeared a bit stretched from the mean and ready to pullback today, but the bulls fought on mightily to keep the day’s loss minor.