Although the indices are trading lower Tuesday and breadth is approaching 3 to 1 negative, what stands out is a long list of stocks that are making big moves and the very strong action in the FAANG names.
There are over 40 stocks on my scan that up over 10% and the momentum in Apple (AAPL) is stunning. Apple has been acting well for a while but the big breakout move to a new all-time Tuesday is quite remarkable.
It is likely that some softness in the indices is making it easier for bulls who are anxious to put cash to work. It doesn't feel like it is as much of a chase when the indices are negative even though individual stocks may be quite overbought.
The most notable thing to keep in mind about the market right now is that there is still a lot of cash that is looking for a place to go. Valuations, fundamentals, and the headlines about pandemics and protests are having no impact on this market. It is simply an issue of supply and demand and the demand for stocks is strong because there is so much cash out there.
The big mistake that the bears are making right now is thinking that a negative narrative is going to influence folks that have cash they want to invest. As long as the price action stays favorable, they simply are not going to pay much attention to pessimistic views of what lies ahead.
My best advice is to stay reactive rather than anticipatory. There are plenty of good reasons to expect that there may be some market downside ahead but until it actually happens it is better to try to knock out some good trades and build a cushion of profits. Make money while you can and worry about the bearish arguments when they are reflected in softer price action.
This is some of the most unusual market action I've seen in my trading career but one thing I've learned is that trends almost always last longer and go further than seems reasonable.