We started off the day a bit shaky because of a couple poor earnings reports and some inflation fears in the U.K., but of course the dip-buyers found a good excuse to jump in once again and soon had us back near the highs.
What was interesting was that the main excuse for the buying was a story that Egypt President Hosni Mubarak was ready to resign. The market has already recouped all losses and more since the troubles began, but it was still a reason to buy. When it turned out that Mubarak wasn't ready to resign, we rallied some more and went out close to the highs.
The Egyptian situation makes for some good headlines, but the market's reaction to it is nonsensical. It is just providing an excuse for the buyers to keep pushing and squeezes the poor bears who can't buy a break.
I would think the situation in Egypt has a good chance of deteriorating overnight, since Mubarak is staying, but the market seems very unconcerned. We'll probably have a gap up in the morning when it turns out that the protestors did only a minor amount of damage.
It feels like we are walking an increasingly unstable high wire, but we are just wobbling a little bit, and optimism remains high that we won't fall. It sure seems prudent to be a little more cautious, but this is not a market that has rewarded prudence of any degree.