Dr. O

Preview from Europe: Market Holds Up Well Despite Newsflow

Given how overbought the market was yesterday, and given the plummet in oil, and the continuing decline in consumer confidence, and the bad bond auction, one would have expected more of a reaction from the markets here and in Europe.

Europe has been leading our futures higher the past few days, and our markets have been tough as nails. All I can say is that it seems US stocks don't "want to go down" now, and that seems to not be connected to current economic conditions.

Are stocks anticipating better days ahead? A Republican takeover of the Congress in a year? Is money flowing from bonds to stocks? Is Ben Bernanke putting a floor under the futures? Hard to say, of course.

But as we all have learned stocks and markets can be irrational for a long time, disconnected, as it were from reality. And while P/E multiples continue to expand all you can do is scratch your head, keep your discipline, not buy into overbought/overpriced markets, and bide your time either to go short, or wait for a trading dip.