Although we have had some weakness into the close the last two days this market has been the definition of momentum recently. We have had four straight gap-up opens and the best 10-day run since 2011. Since the Brexit bottom on June 27 there has only been one small dip.
Can the bulls keep it going? By just about any measure we are now overbought and in need of a rest. The breakout was cemented with the follow-through today and CNBC gets to put up the "Nasdaq Is Positive for 2016" banner, but jumping in to new buys at this point is a tough job. Of course, waiting for a pullback hasn't worked at all, but it is hard to find rational entry points when so many stocks are parabolic.
Keep in mind that strong markets tend to stay sticky to the upside. They don't just suddenly reverse and go straight down. Too many folks will want to buy for that happen. They are quick to buy dips because they are tired of being left behind.
The hardest part of this market right now is trying to put cash to work. You can always buy indices but they sure don't present easy entry. As for individual stocks, it is necessary to really dip deep. I added a few things today such as Yirendai (YRD) , Match Group (MTCH) and Eldorado Resorts (ERI) , but I would have liked to have found quite a bit more.
It is a trite and simplistic saying, but "the trend is your friend" has been the best strategy for dealing with this market.
Have a good evening. I'll see you tomorrow.
