The market continues a powerful display of momentum. It is being fueled by seasonality, optimism bout the passing of a major tax bill and a frenzy in bitcoin-related stocks. The positive action broadened further today and left those trying to call a market top in a daze.
This sort of action is why I so often write that we must stay focused on price action above all else. Those who have tried to find fundamental reasons for why this market can't keep going are in a world of hurt.
Some of the action, especially in the bitcoin names, is extremely frothy and does make you wonder how long it can last, but I think of this sort of action as being like a Ponzi scheme. Fundamentals really don't matter. As long as there is still more cash wanting to come in these stocks can keep going on higher. If you are worried about valuation then you would never buy many of these stocks but that doesn't stop the short term speculators who are watching the crazy moves in things like LongFin (LFIN) and Riot Blockchain (RIOT) .
A couple weeks ago there were 'experts' warning us about the bubble action in these stocks but, as usual, they greatly underestimated the power of momentum. It still feels like the demand for exposure to this sector far exceeds the supply. I look for the frantic trading to continue for a while.
It is very important to look at this market in a couple different ways. The indices are very different than the small cap speculation that is taking place. The positive sentiment is helping the whole market but the chances of a pullback in the indices is very likely before the end of the year.
The small cap speculation should continue but that doesn't mean it won't be without increased volatility. If we stay selective with trades there should continue to be a good opportunities. Stay focused on price action rather than fundamentals.
Have a good evening. I'll see you tomorrow.