The current market environment has been beyond expectations and precedent since this rally kicked off in March. Given the liquidity mixed with the pessimism of the time, the natural move for the markets was to expand on the upside beyond the realm of what anyone expected, despite the seemingly negative fundamental headlines, whether earnings related or with respect to the broader economy.
Now investors are beginning to come to terms with a different reality. That reality is that the bearish reality they suspected to be concrete just a few months ago, turned out to be completely false. This has become cemented with tonight's onslaught of positive tech earnings, proving that the Nasdaq was precisely right in not only being a pocket of relative stability during the March crash, but being a bastion of massive strength during this recovery.
Investors now know, beyond any shadow of a doubt, that earnings for technology are resilient and will continue to be resilient over the short to intermediate term.
The act of "knowing," however, creates market dynamics that have the potential to be counter-intuitive in nature. This is where the danger currently lies in the current market.
To be clear, the type of danger I'm speaking of isn't a March type of crash or anything resembling that event. It is rather a confusing period for the markets that continues to be choppy, greatly punishing the vast army of investors who choose to chase rallies like the one we are almost certain to have tomorrow.
If you had the intestinal fortitude to purchase along side us at the March bottom, where I explicitly laid out the case for what is occurring presently, then you have done well enough that you don't need to play the performance catch up game that nearly everyone who is buying presently is playing.
All that's happening at this point is the market moving into the top end of its range with the afterburners racing due to the heat of all of these bright, shiny fundamental positives. Seemingly a green light for investors to go all-in, which is always reason to take a step back.
Be bullish, but now isn't the time to press the gas at all.
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