I mentioned in my last post that it was very unlikely that the indices would suddenly reverse and go straight down. What I failed to mention was how the chances of even more upside were quite high.
One of the big changes in the market in recent years is the tendency toward lopsided action and V-shaped moves. We simply don't have the ebb and flow that we'd see in the past when human beings mainly controlled the action.
What tends to happen these days is that dip buyers are so anxious and have been rewarded so often that they don't even wait for a dip. The fear of being left behind is so great that even flat action will be used as a reason to buy. Of course, the longer it continues, the greater the inclination to hurry up and buy on even the slightest pause.
The action is a bit more sedate today with breadth running around even and some profit-taking in precious metals, but banks followed through to the upside and the high-beta, big-cap FATMAN names are acting OK.
Overall, it is textbook action for the bulls. Based on the price action, there simply is no compelling reason to be overly bearish. Of course, you can make plenty of pessimistic economic arguments, but the market isn't paying attention.
DragonWave (DRWI), which I mentioned this morning, is acting well, but it still is a major challenge putting idle cash to work. We just have to keep looking.