This has truly been a remarkable run for the stock market since late August of last year. It has been almost straight up with barely a hiccup lower last November. The amazing this has been the lack of volatility and the ease of the gains. The chart is literally a 45 degree angle since that time which is quite rare. It’s as if the bears have completely given up and hibernated. Will this continue?
Time For Breather?
All logic says that the market should digest its gains and at the very least go sideways if not correct 5-10%. The problem is that this seems too logical and straightforward. The M.O. of the market is to make as many people look foolish as it can. If a correction is widely expected, it will not happen. This is one reason that trends usually last longer than anybody thinks possible in both directions.
Another huge advantage the bulls have is the many investors that are waiting for even the slightest dip to buy. I think that there are a lot of investors that have missed out on this big rally and are eager to get in, which will make any dip shallow and short. We have seen that almost every drop has been met with strong buying and the market closes near the highs of the day almost every single session. This is the sign of a strong bull market that has room to go, not one that is about to collapse soon.
Obviously the market will go down again and one day we will wonder if the market will ever go up again. Try not to be to anticipatory for this to happen because it takes a while for the market to form a top as it is not a one-day phenomenon. That Friday a few weeks ago where the market got hit hard as a result of Egypt troubles quickly reversed and is now a complete afterthought.
I would advise against shorting without some sort of catalyst or sign of weakness. Even though you might be right that the market has run too far, it doesn’t care about your position. By the time it does fall, you could be on the street, so respect the uptrend and let the market do the talking. You will do well if you listen to the market rather than act on what you think it should be doing.
Market Due For Breather, But Don’t Count On It is an article from: 
