Logic isn't always a helpful attribute when it comes to trading the market. A rational, logical person might think that the market would struggle a little as it deals with disaster in Japan, war in Libya, debt problems in Europe, the worst new housing numbers in decades, record high oil and creeping inflation. They would not only be wrong, they would lose big money if they tried to fight this market strength.
The market ticked steadily higher all week and even gained traction the more technically overbought it became. Volume was light but breadth quite strong. The market acted like it didn't have a worry in the world.
Perhaps the fact that there was so much skepticism and doubt kept things running. Also, the end of the quarter is approaching and that tends to help hold stocks up, but it is still surprising that the recent buyers of weakness weren't more aggressive locking in gains.
It is often said that extended markets can become even more extended, and that has certainty been the inclination of this market for a very long time. We continually overshoot to the upside, which makes normal trading discipline feel rather foolish at times.
After the run we've had this week, a tremendous number of stocks are now technically extended but we have window dressing next week, which should help to hold some of those stocks up. This market has had a similar configuration quite often over the last couple of years, and the bulls have almost always emerged with the victory.