Market's Winning Streak Persists but Generates Little Excitement

 | Feb 15, 2017 | 4:23 PM EST
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Momentum has a tendency to last long and go further than seems reasonable. We had a good illustration of that today as the indices extended their winning streak. There was plenty of chatter about how extreme this advance has become, but it is running over anyone who is the least bit skeptical.

What was most notable about the action today was that it was driven more by moves in indices rather than by individual stocks. Breadth went from negative to 4,100-2,600 positive by the close, but in view of the straight-up action in the indices, it wasn't a very strong showing.

Another thing that is notable about the action is how little excitement there seems to be among individual investors. They are making some money with their long positions but there isn't the atmosphere of giddy excitement like we had back in the bubble days in 1999-2000. The mood seems to be a sarcastic attitude that stocks are never going to go down again.

We have had many V-shaped moves in recent years, but this one is a bit different because it is occurring as the market is making new all-time highs. There have been some very strong runs like this, but there is a different dynamic when there is absolutely no overhead resistance.

I was a net seller again today simply because my methodology is to take partial profits into strength. My goal is always to keep my accounts as close to highs as possible, and that is what I'm doing. There is opportunity cost when momentum is running as hot as it now and you move toward the sidelines, but making up losses is always much harder than finding new opportunities.

There is an air of disbelief surrounding this market, which may provide the basis for even more upside. Clearly no one is able to predict with any precision when this market may top.

Have a good evening. I'll see you tomorrow.

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