The first full week of trading in 2021 was very good for the indices and even better for aggressive stock-pickers.
What made it even more exceptional was that it occurred in the face of historic political chaos and a raging pandemic. Market players barely blinked at the negative headlines as they pushed the indices and hundreds of stocks to new all-time highs.
The story of this market is liquidity, fear of missing out, and the power of individual investors. The strongest action is being created by the smallest investors who are growing increasingly greedy as small-cap stocks offer a steady supply of profitable opportunities.
Many traditional pundits keep repeating the tired refrain "this will end badly." Of course, it will end badly. All bull markets eventually end, and all ends are by definition "bad."
The only issue that matters is timing. This action could end next week, or it could continue for months. No one knows, despite the many claims of superior insight by various pundits and "experts."
I don't see the small investors relenting any time soon, but earnings season is likely to present some landmines for the unwary.
I plan to stay focused on stock-picking and positive price action. And I'm going to avoid the ridiculous game of trying to call market tops and will focus instead on reaction as market conditions change.
Have a great weekend. Rest up. Next week is going to present an abundance of opportunity.
