If you are a longer term, buy-and-hold investor that doesn't try to time market ups and downs, then you probably are celebrating the sixth straight gap-up open this morning. This is a market that rewards those that stick with the market while others are constantly debating what will happen next.
If you have a shorter-term timeframe and try to navigate the inevitable ups and downs, then the action Tuesday morning is probably a little disconcerting. There is no nuance to the action. It has been a brute force rally driven primarily by celebration that the Fed is likely to cut interest rates because the economy appears to be slowing.
While you can debate the justification for this rally, you can't debate the price action. This is a frenzied move and anyone that tells you they can predict when it will end is just making a wild guess rather than applying logic.
This action is great for the stocks you already own, but it extremely challenging if you wish to make new buys. While momentum has a tendency to last longer and go further than seems reasonable, it increased the risk of buying when stocks go straight, without any rest, for a week. It certainly continues, but the odds of making timely buys becomes much higher in this sort of action.
Markets this strong tend to stay sticky to the upside. They don't just collapse and go straight down unless there is some unanticipated bad news. This sort of market creates a large supply of underlying support. There are many market players that will not chase strength of this magnitude, but they will buy very shallow dips. They don't want to be left out but they want to feel like they are making prudent entries.
In addition to the folks that want to buy dips so they won't be left out, there is the serial market timers that keep trying to call a top and are squeezed when the next gap-up open occurs. Over and over they feed the upside when they cover and drive the market even higher.
So how do we navigate this? Do we keep trying to predict that it will come to an abrupt end? That hasn't worked very well. It is better to wait for actual weakness rather than to keep calling tops into strength.
The biggest challenge is trying to put new money to work. There is a great temptation to give in and buy charts that you normally may not like because you are tired of missing out. It can work if you manage positions very tightly, but the risk is high and the danger of being trapped when something hits overnight is high.
The best advice I can give about this market is to not try to apply your personal feelings about what is reasonable. The market is not a reasonable entity. It doesn't act in a rational manner. The more that people expect it to take a rest or act in a less extreme manner, the more likely it will do the opposite.
My game plan right now is to not make any big market direction calls, focus on managing existing positions and to keep hunting for good chart setups. I'm not going to worry too much about whether the market continues to go straight up or not. When the price action does shift, then I'll react.
Celebrate this euphoria while it lasts, but don't let emotion drive you to make undisciplined decisions.