The equity indices have gapped higher for the sixth straight day, which presents a classic dilemma.
The momentum is too strong to sell but most stocks are too extended to buy.
As long as the indices are in the green, many market players are happy with the action, although for those that actively trade the technical conditions are difficult.
There is an old Wall Street saying that the market takes the escalator up and the elevator down. It is just a clever way of saying that the market tends to drop faster than it rises. However, we are seeing the exact opposite right now. The S&P 500 has recovered weeks of losses in the matter of six days.
Another challenge is that this action is straight up. There is no opportunity to sell and buy back lower as stocks consolidate before they make another move higher. If you sell in this environment the only way to put money to work is to pay a higher price.
One thing we know for sure about the market is that conditions will eventually change, though. With sixth straight days of gap-up opens the odds of further upside are declining but statistics of that sort have a way of finding exceptions in markets like this.
I'll continue to look for new buys but don't think I'll find much. The S&P 500 is under its opening level and there are some signs of profit-taking.