The easiest trade in the world right now is to bet that the indexes can't continue to run higher. The market seems to be wrongfully dismissing any economic damage from the coronavirus and won't even rest. How much longer can that possibly last?
Unfortunately, the easy trade is seldom the smart trade. The logic above and many variations have been tried over the past few months with no real success. The market continues to run over the bearish narratives regardless of their compelling logic.
There was some rotational action under the surface of another day of big gains, but breadth was stellar with about 5,600 gainers to 1,850 decliners. Some of the big winners recently such as Tesla (TSLA) and Reata Pharmaceuticals (RETA) succumbed to profit-taking, but IBM (IBM) and a few other more than made up for it.
Markets like this become quite challenging as they are too strong to short, but too extended to buy. In this case, it is particularly challenging because the market may once again embrace the potential for economic disruption due to the coronavirus.
This market has many folks quite puzzled but they need to keep in mind that the easy trade is not necessarily the smart trade.
Have a good evening. I'll see you tomorrow.