The S&P 500 is now up seven of the last eight days and at all-time highs, but the market feels remarkably dull and quiet. While there is a generally good mood as market players watch their stocks move higher there is much concern about how things will unfold when the action eventually shifts.
It can be safely said that no one saw this sort of action coming. Although there are many bulls that were looking for a continued rally, there was no one that anticipated that the action would be this lopsided to the upside for so long. There has been no natural ebb and flow.
The irony is that this unanticipated strength tends to feed on itself. Many folks grow weary of missing out, so they capitulate and put cash to work. We often hear the word "capitulation" used when the indices are dropping sharply. Market players throw in the towel and just give up looking for a turn.
In much the same way, we have capitulation taking play as the market goes straight up. Rather than keep trying to guess when a turn might happen, market players give up and join the party. They don't think they have any other choice. That makes the trading feel even more irrational but causes even more market players to capitulate.
I continue to pick at a few smaller trades but, as has been the case for a while, the market is too extended to aggressively buy but far too strong to short.