The Best Course of Action, for Now

 | Mar 21, 2012 | 4:20 PM EDT
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We closed a bit weak, but the one-way ride to the stars continues. We have been running straight up for three months and nothing much changed today, although the indices didn't do much. Volume was very light, but that has been irrelevant for a while. Breadth was mixed, but big-cap strength helped cover that up. A little late weakness may have given some hope to the bears for a change, but it hardly qualifies as real selling.

What is most remarkable about the market action is how strong the underlying support has been for so long. We might not gain a lot of points, but we definitely don't pull back much. If we do dip, it is just momentary and very limited. There is a Pavlovian buying reaction to any weakness, and as long as that continues, the bears are going to be highly frustrated.

The complete lack of volatility is great for endlessly trading long positions because it doesn't present the same level of opportunity as a market that has more severe ups and downs. It is just steady grinding, which can be profitable but not very exciting.

I'd really like to make some dramatic market predictions but there isn't any sign that things are about to change. This weak close is going to give the bears a little hope, but we've seen that before. The best course of action is to keep grinding out the long trades and avoid trying to call the turns. Anything other than that just isn't working.

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


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