This soporific excuse for a rally has been paradoxically fascinating to watch over the six weeks during which it has metastasized. The observable fact is that there are practically zero died-in-the-wool bulls buying shares. Instead, even if an inch shy of brain death, the stock market remains oh-so-coy, impelled higher mainly by two factors: too much financial liquidity chasing too few investment alternatives; and, short-squeeze opportunism driven by whatever shred of economic news could conceivably be spun as even faintly positive. And what of the sell side? Actually, there are no sellers. Would you short this market? Neither would I. Is there a speculator even financially able to short this market? Probably not. Anyone with the brains and the guts to do so aggressively would have been beggared by the rally months ago.
Considering the foregoing, we shouldn’t be surprised to see the broad averages continue to climb even as the U.S. edges toward the next, presumably spectacular, economic cliff. To wrap up today’s analysis, let me mention that it is for a reason that I would not short the E-Mini S&P at these levels: to wit, every pattern save the one associated with the long-term bear market is pointing higher. I now see no end to the rally till at (the very) least 1146.50. We can short there till our heads cave in — of course with a stop-loss as tight as a miser’s squint in the noonday sun.