Have you missed this tremendous bull run? Since Oct. 3 the S&P 500 has put on some weight, a robust 330 points (30%) from 1070. The Nasdaq has blasted forward past 3000, a level not seen in more than a dozen years. The Dow industrials is positioned above 13,000 now, up a solid 8.3% for the year. Can the run continue? Sure it can. Markets tend to run further than anyone believes. There are plenty of doubters, too -- bears are around every corner just waiting for the "I told you so" moment. That is why we pay attention to the action in front of us and don't make unnecessary predictions about this or that. That is just market noise -- we ignore it. Please, let's just have the facts -- that is, the charts!
That's not to mention Apple (AAPL), the stock has been giving everyone fits. The bulls can't believe their good fortune in this incredible run, while the bears have been taken out back and shot -- repeatedly. This past week, Apple shares gapped higher every day, turning the investing world upside down. Even the folks on CNBC were astonished by the move.
On Friday, Apple released its latest version of the iPad. Jim Cramer and Stephanie Link of Action Alerts PLUS talked on CNBC about the insides of the new iPad and picked out names such as Broadcom (BRCM), Skyworks Solutions (SWKS) and Avago (AVGO) as being the biggest beneficiaries. They have been noting (correctly, in my opinion) that the upside in Apple is not over, and that this may not go over well for the bears. Options volume on Apple this week was amazing, at a near record for dollar volume in one single issue.
One other note on Apple: For those who believe the stock is overdone, too hot and can only go down, there is another catalyst out there -- one that may eventually trigger some selling. What is it? Let's call it a put option on Apple -- the dividend that many hope and expect the company to pay, given all that cash sitting on the balance sheet. I suspect the company's cash level has exceeded the $100 billion mark by now, and who would want to be out of the name before that announcement came? Of course, this is pure speculation on my part.
Looking to the charts, we see markets have broken free of resistance. Stepping back a few years, on the S&P 500 there is some trouble up ahead at 1440 (dating to May 2008) but that should not be a huge impediment. If sentiment and other indicators are showing very overbought readings at the time, then we could see some selling hit.
As for dangers on the horizon, as always, it's this: complacency. There is not much fear that markets can go down, and why should there be? Unless some unforeseen situations are looming, we are looking at domestic issues: Can the economy grow without much inflation, and will the Federal Reserve feed more accommodation? This has been discussed a great deal lately, but in my mind it's all lip service and jaw-boning. Until the Fed pulls back the punchbowl and sees some inflationary trends in the channel, the monetary conditions for the economy will continue. Don't fight the Fed -- in either direction.