A lot of traders get very confused when the market goes from fear and risk off to new all time highs in a matter of 10 trading days. Here are some causes and reasons for these types of strong movements that seem to come out of nowhere.

  1. When there is maximum fear about the Ukraine, Gaza, and Iraq the weak hands are already in risk off mode, they are already out because they do not want to be risk on going into a geopolitical  mess on the weekend. These are known events already priced in, that was the supposed reason for the pullback to begin with.

  2. With the weakest hands already out they have nothing they can do but chase later at higher prices when the world does not end over the weekend.

  3. Longer term swing traders are waiting at key moving averages like the 100 day and 30 RSI, once in they are not getting out without a move far below those levels. They are strong hands that help decrease selling pressure.

  4. The reality is that it is the holders of the current market positions that matter, if their not giving up their seat on the bull bus the seats to get on later get more expensive as those already int eh market had great entries and want to stay in and ride their winner. So selling pressure is not on the position holders, the buying pressure is on the traders missing the move.

  5. A lot of traders love to short all time highs and over bought extended markets, they think it can’t go any higher, they are wrong, it can at the right time. The shorts end up being the ones that have to buy and push prices higher as their stops are hit.

  6. With two other previous attempts at all time highs the third break out works many times because there were two other previous opportunities for profit taking and that leaves less sellers to exit the third time around.

  7. At all time highs there are not stops being hit just profits being taken that is not much pressure and provides an easier move up.

  8. Every current holder of $SPY is in a profit so the majority are letting their winner run with no pressure on them to sell.

  9. Round numbers act as magnets many times and $SPY $200 is an inevitable magnet.

  10. Don’t fight the FED, they have printing presses.

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