March Continues

Just how high can this market go? It is just unbelievable. Despite the negativity and pessimisms regarding this economy, the market continues their bullish ways. Today's action was abetted by the options expiration but many of the "momentum" stocks and stodgy stocks both gained in healthy volume and price action. The breadth was wide and advancers to decliners on the NDX was 3 to 1. Also, the small caps and IBD type stocks also finally joined the rally in a convincing way.

Where is all this liqudity coming from? It seems like any stocks with decent potential are being bid up. At some point, we would need a correction but I won't guess about this. I will continue to do this until the market tells me I need to stop going "long".

Sadly, I still believe that the retail investors are the ones that will end up holding the bag on this rally as many are still shell shocked from February market melt down and are waiting for a chance to get in. In the mean time, the hedge funds, and global investors are probably bidding our stock market up right now. Why fight the force? The encouraging aspect of this rally is that there are enough people waiting for this market to unravel. Many are convinced that the dislocation from economic fundamentals and market technicals will end in disaster. Yet we keep climbing. Calls for a "new" bubble is resonating and words like "unsustainable" is being heard. But as a trader, I don't really give a care about why the market acts like this. As long as I have the strong momentum, I know I can make money.

I had one of the readers of this blog accuse me of not being thorough. I appreciate any comments good or bad as it shows that someone is actually reading my fledgling blog. I never make any pretenses that I am all knowing. My blog is about my thoughts and why I trade. But that can be seen in my profile. I am a momentum trader and will change sides as opportunities arise.

But enough of that. I would like to point out that Nasdaq which has been a laggard, is on the verge of joining the rally full time. Also QQQQ is showing bullish chart pattern. I omitted the Dow and S&P 500 because they are obviously over extended and in a clear uptrend. I think we will have a chance for Russell 2000 small cap index and Nasdaq to finally join the program.