Fighting Off the Bears

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The major indices continue to move higher this morning, although not quite with the same energy that we saw yesterday. We are finding some quality breakout setups inside 12631 this morning, but clearly a rest in many stocks would not come as a surprise after the recent run higher. After not tipping its hand for the latter-hald of 2011, the market is suddenly acting as though there is a persistent underlying bid that refuses to go away, fighting off the bears’ attempts to break us down at every juncture. I also see that the QQQ ETF is hitting multi-year highs, thanks in large part to the resurgent Apple hitting all-time highs. After trading it successfully on the short side a few months ago, I knew I had to be nimble with AAPL‘s prior “Island Top,” which has since been clearly negated in favor of the bulls.

Just because the market is due for a rest or correction, though, does not mean it will happen imminently by any stretch. The nature of a trending market is that it can go in one direction much longer than any reasonable person thinks is possible. Accordingly, rather than trying to time a market top, I am spending my energy and time focusing on the price action in individual issues and sectors. While we are not looking at a jaw-dropping amount of quality setups right here, right now, after the recent rally, that is not necessarily a green light to buy inverse-leveraged ETF’s.