After five straight up days, the bears finally managed a little profit-taking, but it was very meager and goes to show the very strong undercurrent of support that is out there. We had almost no dips at all this week, and that has created a large amount of anxiety for both the over-anticipatory bears and the underinvested bulls.
The market is certainly a bit extended and in need of a rest, but the fear of being left out of what some people think is the greatest bull market ever that is completely unlike anything we have ever seen before is providing tremendous support.
What was particularly tricky about the action this week was that we just kept on going straight up once we started to bounce. That just wasn't what you'd expect from the technical picture that was developing after a breakdown the week before, but what has been so impressive about this market since March is how vigorously we run up. If you haven't stayed very aggressively bullish, you have been lagging this market.
The good news for the bulls is that it still doesn't feel like there is much love for this market. Sure, you have some traders who are riding the momentum, but they have no loyalty and will hit the sell button at the first sign of problems. There are some true believers like Jim Cramer, but they are few and far between. Many others like Doug Kass and Bob Marcin think we are very close to topping out, although trying to get the timing just right isn't easy. With all that skepticism out there, the market is in good shape to continue to confound the bulls.
Weeks like this can be very difficult, because it is very hard to keep pace unless you just have held on and stayed extremely bullish. If you have taken profits or been underinvested, which seemed like very prudent things to do, you aren't going to be keeping pace with your fully invested friends. But that is the way it goes in this game...