The indices are hitting new all-time highs as they shrug off yesterday's intense rotation. The new highs are piling up and breadth is stellar. The FAANG names and many technology stocks have not seen very strong bounces, but overall market strength is putting bids under everything.
The primary driving force seems to be the news that Senator McCain will support the Senate tax bill. The odds that a bill will be passed by the end of the year are now around 75% -- and that seems to be sufficient reason to keep adding long exposure.
The fact that we have been rallying on the hope of a tax bill for over a year doesn't seem to bother the market at all. The good news is never fully discounted. It is reminiscent of how the market rallied on the same "Greece is saved" news dozens of times.
Logically, it would seem that this is going to be a setup for a massive "sell the news" response once a bill is passed, but "sell the news" is not an easy approach in recent years. The market has consistently kept running up on events like the Fed -- even when well anticipated. The computer algos are apparently programmed to "buy the news," no matter what it might be.
Biotechnology names are looking particularly good, such as Sarepta Therapeutics, Inc (SRPT) and Flexion Therapeutics, Inc (FLXN) . Even some of the badly abused MLPs, like Tallgrass Energy Partners LP (TEP) and Energy Transfer Partners, LP (ETP) , are bouncing.
Bears were too quick to pounce on yesterday's Powershares QQQ ETF (QQQ) selloff as a sign of a top. It still may mark a significant change in market character, but the old saying is that a top is a process and not a single point. This one is still enjoying some strong momentum.