Retail sales numbers were just in-line, despite being inflated by high gas prices, the FOMC did nothing surprising in its interest rate announcement, and JPMorgan Chase (JPM) raised its dividend just $0.05. Yet the market ran up like it was celebrating some huge surprise developments.
I'm sure the headline writers will dredge up some good cause-and-effect relationships to explain the action today, but the real reason this market kept on running was because so many folks, both bears and bulls, weren't expecting it. There is a huge group of folks who want this market to rest a little. The bears just want a little pain relief while the bulls want some better entry points. When the market refuses to cooperate with even a brief pause, they are forced to chase again and that is what gives us the euphoric action that seems so joyless.
What continues to be most surprising about this market action isn't the fact that we are in an uptrend, but that the action stays one-sided for so long. This is the fifth straight day the S&P 500 has gapped up, and we've only had one real day of selling in nearly three months. There is no back and forth at all. It is just a one-way street to the heavens.
The great temptation is to keep trying to call a top. It will happen eventually, but as I discussed this morning, far more money has been lost trying to anticipate a top than will be lost when one finally does occur, especially if you use good money management. You don't have to be wildly bullish to respect a trend, you just have to avoid fighting it.
Have a good evening. I'll see you tomorrow.
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