There are many complaints about the market recently. A common gripe is that it's acting in an artificial way and that the steady rise in the indices is unjustified.
Guess what? The market doesn't care.
There was a nice uptrend most of Friday, following positive comments about China trade, and a late surge that took the indices to new all-time highs. The DJIA even managed to close above 28,000 for the first time in history.
Breadth was solid with 4,900 gainers to 2,500 decliners and, once again, there were no meaningful pullbacks. Many traders appear to be struggling to put cash to work.
What is most notable about sentiment is that there isn't much cheering. The mood is nothing like some of the prior tops, especially back in 2000 when the euphoria was through the roof.
One of the main things that continues to boost stocks is a likelihood that the indices will continue to see positive reactions to every mention of progress on trade. There are few traders that want to be short if and when a "Phase One" deal is finalized. While many skeptics scoff at the idea that any sort of deal will ever be done, it is too dangerous to bet against it at this point.
Often what works best in the market is quite simple and disregarded because it seems so trite. Currently, all you really need to know is "the trend is your friend." Those that have been trying to fight the trend are losing. It is as simple as that.
This goes hand-in-hand with another worn saying, "don't fight the Fed," but currently, that probably should be amended to read "don't fight the China Trade deal."
It is very easy to come up with reasons for why this action is ridiculous and unsustainable. The same could have been said two, three, or six weeks ago. This is why I constantly stress to focus on price action rather than macro arguments.
I don't know if we will see a big reversal next week. It is possible, but until there is a shift in the price action I'm not betting on it.
Have a great weekend. I'll see you on Monday.