A Trying Trend

 | Mar 26, 2012 | 4:24 PM EDT  | Comments
  • Comment
  • Print Print
  • Print

Today's action makes you wonder why you ever bother selling anything. We gapped up, flatlined for a few hours, and then closed at the highs. There wasn't a worry in the world, and if there was any selling, there were plenty of buyers willing to snap up the offered shares.

As has been the case lately, breadth was superb, with all major sectors in positive territory, but volume was unimpressive. The conventional wisdom is that markets that move up like this on declining volume shouldn't be trusted, but the conventional wisdom has been just plain wrong about the importance of volume for a long time, and it has been very misleading if you have focused on it to any degree.

There are good reasons to believe that this market might be a bit too frothy. But just like the conventional wisdom about volume, the conventional wisdom about sentiment isn't working very well, either. Trying to guess when the market might be so extended that all the buying power is about used up has been an impossible task. When action is this lopsided for this long, the buying power has to be depleted at some point, but that little bit of logic is killing the bears right now.

What is most challenging about this market is that even if you aren't fighting it, it is still tough to embrace it fully. How can any reasonable person not expect some profit-taking to occur soon? We have been going straight up all year and have not had a single notable pullback. Common sense and any prudent money-management scheme demands that you lock in profits at some point, but buy-and-hold has been the profitable course of action.

The key to making money in this market is to stick with the trend. Until we actually have some weakness, we have no other choice.

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

_______

Editor's Links

More from James "Rev Shark" DePorre:

Columnist Conversations

Do I really need to tell you that overnight inventory is long as measured against Thursday day session close? ...
Starbucks' same-day delivery launch for 2015 is catching the headlines this morning. But here are some other t...
Here is what I saw in the company's holiday sales plans. All in all, the company is betting big on the U.S. c...
Lang:
On this Halloween day we reflect on a month of wide swings and volatility. Just two weeks ago it appeared the...

BEST IDEAS

REAL MONEY'S BEST IDEAS

Columnist Tweets

BROKERAGE PARTNERS

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data provided by Interactive Data. Company fundamental data provided by Morningstar. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by Interactive Data Managed Solutions.


TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

IDC calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.