Today's action is a particularly good illustration of how strong markets have a tendency to stay sticky to the upside. Markets that go straight up don't just reverse suddenly and go straight down. It is very rare for markets to collapse when they are hitting highs.
It takes a while for topping action to play out. There are always late comers who have missed much of the move and they are looking for entry points on any pullback. In addition, there are the premature bears who end up servicing as short squeeze fodder. Performance anxiety is another driver that tends to keep markets running. People have a tendency to be more worried about missing more upside than they are about being caught in a reversal.
When the market starts to top, one of the first things we will see is that leadership and momentum tend to narrow. Fewer stocks will be running, but there is still enough money chasing that it keeps the indices up.
Another sign that a top is forming is when we see weak closes. We haven't had any of those lately and the action today is textbook bullish again. The market opened soft, and even had bad news, but buyers jumped on the shallow pullbacks. As the day winds down, the market is already hitting intraday highs.
The main clue that many technicians and momentum players use to signal that the market is topping is distribution days. When the market has a down day on higher volume it signals that institutions are selling and a top may be developing. Since there's barely been a negative day this year, distribution is not yet a problem.
My biggest complaint is that there isn't much energy. The market is sleepwalking higher and it is extremely difficult to be aggressive. I see some patterns I like, but I'm not able to put much money into them.
It might not be too exciting, but this market is still acting just fine.