Is the market losing its mind?

Free After-Hours Analysis:

Did someone forget to tell the Nasdaq we’re in the middle of the worst economic contraction since the Great Depression???

Talk about a major divergence from reality. While the cynics cannot help but argue with this market, never forget, we trade stocks, not headlines or the economy. If stocks want to go up, there is only one way to trade this. If you don’t agree, your only choice is to get out of way because if you don’t, you are going to get run over.

Without a doubt, this rebound will end at some point because they always do, but this is definitely not that point. This month’s 6% collapse was the perfect setup to trigger a much larger collapse. If this rally was overbought and vulnerable, that was more than enough to trigger a much larger avalanche of follow-on selling. Instead, confident owners shrugged and bought the dip. When stubborn owners refused to sell, headlines don’t matter. End of story.

At this point, keep an eye on Monday’s lows. If we fall to this level, start locking-in some profits. If we retreat back to the previous Monday’s close, peel off some more profits. And if we return to this June’s lows, get all the way out. Anything other than that and lookout above. I fully expect the S&P 500 to match the Nasdaq and reach new highs over the next few weeks. We buy higher-highs, we don’t sell them.

If everyone knows the Fed rigged this market to keep going up, quit complaining about it and enjoy the ride!

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