One of the great ironies of the indices hitting new all-time highs is that it triggers endless speculation about how much longer it will continue. It is a natural inclination to anticipate that the good times may not last, but it is very easy to not take full advantage of the opportunities while we can.
Many market participants find themselves focusing on what can go wrong and when -- rather than what they might do to take advantage of the positive action. Everyone knows that the market goes through cycles and will eventually undergo a negative change, but it is too easy to use that as an excuse to not use the current positive action to find profits.
We are that point today, where even the bulls are feeling a bit cautious as the new all-time highs continue to pile up and many stocks become extended. The number of breakouts is increasing and the pure momentum names are seeing traction.
In the early going, the indices are set to push even higher into territory they have never seen before. It is well known that the days before and after Thanksgiving tend to have a positive bias and that traders often focus on driving some thin, speculative stocks as they hunt for action.
The early tone is good and traders will be digging for some day trades to entertain themselves before heading out to make sure they have everything they need for their Thanksgiving feast.
What is important today and Friday is that the action not be viewed as particularly meaningful. It is short-term oriented and it not likely that there will be a significant change in the character of the market. Next week, we return to serious business and those that are looking to make major directional calls will have more luck.
The most important thing to keep in mind right now is that the endless speculation about progress on a China deal is keeping a bid under the market. It simply isn't possible for the bears to gain any traction when there is the potential for yet another headline about how a China trade deal is progressing. Those headlines, even though they seem meaningless, lead to automatic buying and keep the price action positive.
The action will be thin and random today and I'll be looking for some trades. The usual bears will be growling about how disaster awaits, but it appears likely it will wait at least a few more days.