But don't overlook THE key short term driver for why the market has a "preternatural bid" beneath it: Record Shortselling.
According to today's WSJ, "Short-selling activity rose to a new record on the technology-stock-heavy Nasdaq Stock Market, outpacing the rise in bearish bets in other parts of the market."
"For the monthly period ended Oct. 13, the number of short-selling positions not yet closed out at Nasdaq -- so-called short interest -- rose 0.8% to 7,414,701,519 shares from 7,353,774,333 shares in mid-September.
The rise outpaced the 0.1% increase in short interest at the neighboring New York Stock Exchange, which as previously reported also saw its total short interest hit a record in the October period.
Despite a market run-up that has pushed the Dow Jones Industrial Average to records this month, many short-sellers have hung onto their bets, which lose value during such upturns...
The Nasdaq short ratio, or number of days' average volume represented by the outstanding short positions at the exchange, fell to 3.9 from 4.4 last month."
The record short selling manifests itself in several ways in actual trading.
From a sentiment perspective, it means that we have not achieved a giddy excess bullishness required for a correction.
And, as long as short positions are at all time records, its hard for any correction to develop. Any downside momentum is simply halted by covering. And exasperating things, each move upwards becomes exaggerated as shorts stop losses get triggered and they buy in.
Of course, this can change in a hurry: words or deeds from the Fed, oil prices, geopolitics, even an errant comment from Treasury Secy can start a cascading chain reaction.
Consider this: if the rabid anti-shorting Sith Lord crew get their way, they will have succeeded in removing a key floor to markets, and source of buying when we correct.
Despite my Macro-environment Bearishness, I have been telling clients that it is still too early to short, given the technical picture. Short interest only adds to that.