We have melt-up action today and, so far, the bulls are showing no sign of slowing. What set it up was the opening strength not being sold like it was Tuesday, and then once we made a new intraday high, the dip-buyers, who were waiting to do their thing once again, suddenly turned into chasers.
It is extremely lopsided action, once again, with excellent breadth. Of course, volume is nothing special but that seems to be routine these days. Big volume accumulation days are nice but seem to be irrelevant as an indication of momentum.
Since the low in March 2009, I don't know how many times I have written about this type of action. It isn't that the move is all that big or surprising, but it's the manner in which it occurs. As I noted yesterday, for the first time in history, January did not have a single day with a pullback of greater than 0.6%. There was no weakness, no ebb and flow and no real dips to speak of. Logically that would not seem to be sustainable but in this market, it has been far more sustainable than most anyone would think. In fact, not only is the move sustainable, but the pace of the advance is picking up today.
While the media and many investors cheer, I find it ironic that many aggressive traders tend not to be so happy about this action. Traders make their money by navigating the ups and downs, and when there are no downs to speak of they end up struggling to put money to work. I'm hearing many complaints from underinvested bulls today, which never used to happen in the uptrends of old (and made entries much easier).
It is a trite but bears repeating, especially in a market like this: The trend is your friend. Even if you think this move is totally unwarranted, the nature of the market action should prevent you from trying to fight it. These moves are the norm and they don't end just because you might think they've continued too long.