With the S&P 500 and Nasdaq hitting new all-time highs this morning, the market mood is upbeat but there is an undercurrent of puzzlement that is keeping some buyers hesitant.
For weeks now market players have been trying to reconcile the steady strength with the negative news flow. While many have embraced the view that this strength is driven by central banks and liquidity, it is difficult to totally ignore something like a warning from Apple (AAPL) that the coronavirus is impacting economic activity.
For many market players the fear of what might happen down the ride is keeping them sidelined but as they watch the indices hit new highs they can't help but try to participate to some degree and that keeps the trend running higher.
Breadth is about 2 to 1 positive and there are over 600 stocks hitting new 12-month highs. This is not just index or big cap driven action. There are many pockets of strength and some very strong momentum in individual stocks like Enphase (ENPH) .
The easy thing for market pundits to do is to keep saying that this action can't continue for long. That is certainly much easier to do than trying to jump on some long trades and catch a ride. Anticipating a turn is the safe bet while riding the momentum is a much harder trade as things become extended and there is no positive news flow to justify the strength.
Although I'm trying to stay with the momentum, I'm having a very hard time putting additional capital to work. There is some choppiness and inconsistency that is quite challenging. One name I added to this morning is Recro Pharma (REPH) which is lower on light volume.
I continue to hunt for buys but I am staying highly selective which can make you feel left out when the market is acting this frothy.