In order to navigate the market successfully it is important to appreciate that it doesn't operate with the same sort of logic that human beings employ. What seems quite obvious to us often produces the exact opposite reaction in the stock market.
For two weeks now many market pundits have been anticipating a reversal. First, they thought that the market would react negatively to some mixed earnings report and then this week they were looking for a "sell the news" reaction to the Fed and some major earnings reports.
It makes perfect sense that after a strong run that some major news events would trigger some profit-taking but that isn't what happened. There was some weak action on Thursday but better-than-expected jobs news and progress on China trade caught the overanxious bears by surprise once again and pushed the S&P 500 to a new all-time high.
It was a steady day of buying with a close at the highs, strong breadth of around 5,500 gainers to 1,900 decliners and the most new 12-month highs in a long time with about 750.
Obviously anyone trying to predict a top in this market has had great difficult but the underinvested bulls have faced some problems as well. It is not easy to chase some of the strongest stocks at this point as they become increasingly overbought. As I wrote on Thursday, a pause or pullback would be very healthy as far as helping charts develop.
The most important thing to keep in mind as you contemplate the week ahead is that markets that are this strong don't just suddenly collapse. There is always the chance of unexpected news but this sort of price action creates conditions where there is strong underlying support. Those that have missed this move are champing at the bit to buy a dip and not miss out.
My message for weeks has been to stay with the price action and forego the bearish macro arguments. Those bearish arguments may be very insightful and logical but they are not working. As traders our job is to do what works best and what works best is staying with the positive trend.
Have a great weekend. I'll see you on Monday.