Once again, the market shows why the folks who are battling against it are so frustrated. After two days of light-volume gains last week, we gapped up this morning. That would technically create a good spot for some profit-taking, but the bulls barely budged. We had a brief dip after the open but held steady the rest of the day and ended up closing near the highs of the day.
What has been so tricky about this market since March is that these low-volume recoveries after a breakdown have had a habit of continuing. Typically, the higher-percentage bet is that the market will roll over again after a low-volume bounce rather than continue to uptrend. This market has consistently broken that rule, and that has accentuated the upside persistence, because shorts end up being squeezed, and underinvested longs get frustrated and chase things higher.
The bottom line is that we have a market that just doesn't roll over easily even though there are plenty of reasons, both fundamental and technical, why it should. There is no shortage of folks who are rooting for some weakness in this market, and that is probably one of the reasons we don't pull back. The main thing to keep in mind is that until the price action shows some weakness, we better be careful about betting against the bulls....
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