Doug Kass from realmoney.com often describes the market as being without a memory from day to day. This market has a memory, but it only remembers the good news and immediately forgets anything negative. The GS fraud case and the European sovereign debt issues that plagued the market on Tuesday were completely forgotten today as the market focused on good earnings news.
What is most surprising about this action is that it is no surprise at all that we immediately turn back up after a good bout of selling. Quite a few technicians were ready to proclaim the action on Tuesday as being an important turning point, but as has so often happened, we quickly negated the negatives with a fast bounce.
It can be very tempting o keep trying to call a top in this market. It is just good old-fashioned common sense that sooner or later we are going to have a significant correction. Who doesn't want to be the hero who calls the exact turning point?
Unfortunately, it can be a very costly game to play. The best approach for most market players is to just stick with the trend while it lasts. It helps to focus on the action in individual stocks and to take gains as things become extended, but if you stay disciplined, you'll be better off than if you endlessly try to call a top....