Headlines about progress on China trade coupled with positive jobs news are lifting the S&P 500 to new all-time highs. The fact that there are so many market players that have been skeptical of continued market strength is helping to provide additional fuel. Positioning for this sort of strength is poor and there are many who are struggling to add long exposure. Also, let's not forget our old friends, the bears, who are providing some short squeeze fuel as well.
China said that it has reached a consensus in principle with the U.S. on core trade concerns after a phone call among high-level trade negotiators this week. Trade representative Lighthizer and Treasury Secretary Mnuchin said that progress has been made in a number of areas and the discussions will continue at the 'deputy level'.
Essentially this is part two of phase one of the China trade negotiations and demonstrates that an incremental approach has now been embraced rather than hopes of a Grand Bargain that Trump indicated was his initial goal.
Regardless of how it is taking place, the market is happy with the progress on this issue and it is creating a fear of missing out as investors try to keep pace with this action. There have been few folks that have been wildly bullish and that is about the only way to have kept pace with this market that is now starting to move in a parabolic fashion.
I've been yelling loudly about staying focused on the price action rather than macro arguments and this action is exactly why. It doesn't much matter what insights you might have about the troubles the market will face at some point. They don't matter right now and you are losing money if you are trying to fight this strength.
I'm going to continue to look for ways to put cash to work. This market action doesn't offer any other alternative right now.