Despite record setting unemployment numbers and forecasts of the largest drop in GDP in history, the market continues to trade like it doesn't have a worry in the world. It is remarkably complacent action with breadth running around 5 to 1 positive and about 100 names at new 12-month highs. The market cap of the Nasdaq 100 (QQQ) has hit $100 billion for the first time in history.
Traders are using an 'if you can't beat them, then you might as well join them' mindset. They are sticking with the positive action because that is what is working. There are always a few brave souls that try to time reversals but they are racking up steady losses as they are constantly stopped out on each attempt.
Yesterday I discussed how despite the series of strong 'gap up' opens, there has always been a tendency toward weak closes. That is not the typical pattern in strong uptrends but there are few things that are typical about this market. I expect that traders will be looking for another weak finish today. With the weekend looming there may be some inclination to lock in gains after a good week.
I continue to look for shorter-term trades and am surprised at how good the price action is in many of the small caps that I'm holding. A good example is my Stock of the Week, Slack (WORK) , which broke out today. I took some partial profits on it but the momentum there is showing no signs of slowing.
Even a short squeeze in Beyond Meat (BYND) is working again
It is becoming quite frothy out there and the dismissal of the negative economic news is stunning, but as I've written many times, we have little choice but to respect the price action above all else.