Many bulls were hoping that there would be some consolidation or corrective action that would help provide a healthy technical base for more upside during earnings season. The market, however, did what it often does and ignored reasonable, common sense and has become even more extended and overbought on the eve of earnings season.
Apple (AAPL) not only continued to push higher and hit new highs, but the pace of the gains accelerated. Apple added an additional 2.14% Monday is now up around 44% since early October. That is an amazing gain for the largest stock in the market and offsets quite a bit of less energetic action in thousands of other stocks.
Of course, the question on everyone's mind is, How much longer can this last? For a while now the answer to that question has been longer than you think and that continues to be the answer.
With earnings season starting Tuesday, there will be some brave bears proclaiming that the party is close to an end as we are forced to actually consider valuations after a huge run. The problem is that the folks who are buying stocks right now are not driven by fundamentals or even technicals, but by liquidity. The Fed is the driving force behind this action and there doesn't seem to be any fear it's about to suck liquidity out of the market.
The best way to think about this market is to embrace the idea that it is not rational. Once you give up on the illusion that the market efficiently prices stocks and that craziness can persist, then you are in a position to deal with what is happening.
Big banks report in the morning and expectations are for some solid reports. Why shouldn't this market continue to trend higher?
Have a good evening. I'll see you tomorrow.