The most bullish thing about this market is that just about everyone is mystified by the very persistent strength. Even some of the perma-bulls are declaring things too extended to buy at his point. For a while, it looked like we might actually end up with a little red on the screen, but with so many folks rooting for some weakness, it wasn't too difficult for the bulls to pull off a late-day squeeze that took us out at the highs. The Russell 2000 is now up nine straight days in a row and 20 of the last 22 days, while the Nasdaq 100 is up 11 days in the row.
The move today was small and came on declining volume, but anyone trying to call a top was very frustrated once again. One of the most interesting things about this market is that there sure doesn't seem to be a lot of joy or excitement. It often felt the same last year when these sharp upside moves were more a cause of frustration rather than celebration. It is a much different feeling than what we had back in the bubble days or when we had some big rallies a few years back. I'd love to provide some fresh new insights about this market, but the situation has been the same for over a week now. We are very extended and have had no consolidation, and we are showing no signs of weakness at all. I think the bulls were on a mission for the S and P 500 to make a new high over 1150. We did manage to close just a few cents above that level, so now we have a new high for the year in that index. The 1150 level is the very obvious place to set buy stops.
The classic scenario is that we break to a new high and trigger the buy stops, and that causes shorts to cover and new buyers to jump in, and then we reverse. Nothing about this market has been very logical lately, so I'm not too quick to embrace that scenario, but if we are ever going to reverse, you have to be looking for a situation like that. Trading this very lofty market is not an easy task, but it is the nature of the beast, and we just have to keep at it. The key to success is to just keep plugging along......
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment