If you are looking for an easy explanation in the news headlines for Tuesday's market strength, you aren't going to find one. Janet Yellen was quite dovish as expected, but that really was no big surprise. Nothing much new happened on the political front, and there wasn't much talk about Covid or the vaccine rollouts.
The bears continue to tell us how crazy and unjustified this market is, but, apparently, no one is paying any attention to them. They have been saying the exact same thing for months and haven't been close to being right.
What is driving this market is just plain, old fashioned momentum. Aggressive small-cap stock picking has been working very well, so that is what traders keep doing. All they care about is price action.
For some reason, there are bears who think this market action is just going to suddenly stop, and all these traders that have been racking up profits like never before are just going to just go away. That isn't how human beings tend to think or act. Most people just keep doing what is working, until it stops working, and they start suffering some losses.
Once again, it was the small-stock speculative trading that was the star of the show. Some of the big movers were biotechnology names like Gritstone Oncology (GRTS) and Aclaris Therapeutics (ACRS) . Themes like lithium, drones, and special purpose acquisition companies were running again.
The easy thing to do is to say, "it can't last much longer." The hard thing to do is to keep pressing and to look for the next trade. Typically, it is the hard thing that is the most profitable.
Stick with the price action. It is a lot smarter than the gurus with crystal balls.