As Usual, Stocks Push Higher

With stocks continuing to grind higher toward their 2011 peak, it becomes increasingly incredible that the market, as measured by the S&P 500 has not dropped at least 1% since March 15. Ironically, the next day the drop was even more precipitous, sending stocks to their starting level of the year. Since then, it’s been a pretty remarkable run — a 6.2% gain in 15 trading sessions. That run continued Wednesday, not in any spectacular fashion, and in fact, stocks spent a portion of the midafternoon slightly in the red, before, well, doing what they do — rise. The Dow Jones Industrial Average ended 33 points higher to 12,427, the Nasdaq rose 9 points to 2800 and the S&P 500 added 3 points to 1336. During that time, it’s been difficult to find anything that isn’t working for investors. Energy stocks? Check. Industrials and building materials? Check. Automobiles? Check. And that’s just equities. Lost on no one, of course, has been the parabolic rise in gold and silver, which are each setting all-time and 31-year-highs on almost a daily basis. (They did so again on Wednesday). With such a run in stocks, one can’t help but feel a need to take part in the ride higher while also wondering when said ride will end (or whether it will). But this is a difficult time for skeptics. Whenever it appears there is a crack in the rally’s armor, the forces of momentum gather themselves for another move higher. Any cynical illumination of low breadth or low volume becomes fodder for the next closing high. That’s not to say that those arguments aren’t valid. As we mentioned in this space on Tuesday, the Nasdaq 100, rebalanced or not , does look a little spent, and is actually down from one week ago. And it’s helpful to keep in mind that the broader market also has yet to rise more than 1% since March 21. Volatility has taken a back seat, and it seems difficult to imagine another 6% runup by the end of April without some further tangible reason for it. In the end, the last hope for a market correction of any scale may lie in the banking sector, which curiously hasn’t gone gangbusters while all around it has. The Financial Select Sector SPDR (NYSE: XLF ) exchange-traded fund, in fact, is still down almost 3% from its 2011 high, and is essentially unchanged from late January. If things are so great, one may still wonder, why aren’t bank stocks participating? On the other hand, why worry about it when easy profits are to be made elsewhere?
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