The price action over the last ten days or so is impressive, but it has become almost routine since the bottom in March 2009. I don't know how many times we have come back from the so-called "brink" of a breakdown and then went straight up on low volume. We cut through resistance levels and never even give the dip buyers a chance to jump in.
What makes the moves even more challenging is that they occur when there are excellent bearish arguments. I don't think anyone would dispute the fact that Europe is still a mess and that the economic situation in the U.S. is still very challenging. Despite a clear agreement on the negatives, or maybe because of it, the market acts like it doesn't have a worry in the world and simply crushes the skeptics who look for us to roll back over.
The contrary nature of the market is aided to a great degree by high-frequency and computerized trading, which exploits the fact that too many folks are out of position for this sort of action. The machines keep pushing as consternation about the one-way nature of the market grows.
The lesson is clear. We cannot underestimate the ability of the market to trend higher, even though both technicals and fundamentals are questionable at best. The fact that it is so easy to make a negative case against this market is the number one reason why many are finding it so hard to short it.
Next week, earnings reports will be hitting in abundance, especially AAPL and INTC.