"I'm a pessimist because of intelligence, but an optimist because of will." --Antonio Gramsci
One of the easiest and most irresistible arguments you'll hear right now is that this market is doomed. Pessimism has greater intellectual appeal -- even more so when the market has been in such a stubborn uptrend for so long.
What makes negativity so intellectually appealing is that it allows the bears to tell us what we are missing. If we really understood what was going on, there is no way we could be positive. Only the blind and deluded could think the future is bright, or so the argument goes.
The optimists, on the other hand, seldom have the opportunity to sound so erudite. Arguing that things won't go wrong sounds hopelessly naïve. Those of us who have lived life know it's the human condition to screw things up, so why should the stock market be any different?
Unfortunately, while pessimism and negativity may have intellectual appeal, that doesn't mean it is more likely to be correct than a rosy outlook. In fact, the irony is that the louder and more convinced the bears become, the more likely they are on the wrong side of the market. They help to create the whole "wall of worry" phenomenon, which slowly sucks the skeptics in as they worry about missing out while the market keeps running.
As the market continues to run, we hear more and more from the bears about how disaster is right around the corner. Sure, the bulls are making money right now, but not because of their superior insight and logic. It is because they are too dumb to understand how bad things really are.
The easiest way to deal with this is to stay focused on the price action and forget all the intellectual arguments. No matter what the market is doing there are always great and compelling arguments for both the bulls and bears. There has never been a time in history when there weren't champions for both views of the market.
The problem with focusing on trying to determine the true nature of the market is that it doesn't necessarily make us any money. The only way to make money is to be in tune with the price action. Theories, arguments and logic won't make you money if you are the wrong side of a market trend.
All you really have to know about the market is that the uptrend continues. We have very strong underlying support and the sellers aren't able to do much. The bearish arguments are often very convincing, but they don't matter right now. Maybe they will soon and we'll have to give them some respect, but theory isn't paying the bills.
We have an upbeat open on the way as the U.S. dollar continues to sink and Europe remains on the right track. What we have to watch for is an intraday reversal to the downside and a weak close. Until then, there is no reason to question this very persistent uptrend.
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