An interesting thing has happened in the last 6-8 weeks.  There are almost no sellers.  Literally.  The market has made a massive push and it really struggles to sell or stay down.  It seems almost funny how bad it is to try to short for more than maybe 20 minutes at a time.As most traders find out - fighting the market is pointless, all you can do is react to what you are given.This action sure makes Trading hard, the guys that are really getting the most out of it are the buy and hold.

One thing I know is that you cannot continue this indefinately - the chasing and then bidding the market so it wont sell will stop.  The only way you actualy make money, whether day trading or longer term investing, is to  lock in profits.  Until then its just a fantasy.At some point they will turn the tide from chasing in, to wanting out to lock in profits (or avoid losses).

A favorite pattern lately has been to break down below a support (or even key support) and then out of nowhere a massive burst of buying comes in to rescue the market.  It happens so often I now expect it to happen.  Often this can result in a new daily low (the break) , only to see a new daily high 30 minutes later as the buyers relentlessly chase the market (im sure shorts are in there too, trapped like dogs).

Even when the economy was plowing along at full steam, we would have 10-15% corrections all the time.   And this was when everything was just perfect (or everyone thought so).Because of this I am not sure what is actually going on.  Several theories are in play that I think about:

1. Shorts are completely or mostly out of the market.  The SEC messing with the short rules before caused a panic, and now there are many proposals again in regard to uptick rule and shorting.  Rather than get caught, they are staying away from day trading and longer term positioning.
2. The level of manipulation appears high.There is a group of funds or banks backed by the Fed and Treasury whose goal it is to push the market higher to form the opinion that the economy has turned.The way the market always rescues itself from the brink of disaster, the ramps into the close every friday, and other odd trading action gives this one some credibility.  Would be easy for the government to just give these guys money to push the market up.
3. Traders all gone, algo's take over.This can happen also - computerized trading has taken over more of the futures market, which in turn drives stocks.  Since there is no real force to fight them and they are all doing the same thing it just keeps going.  This one I like too because the actual variance of price during the rally pushes is actually uncharacteristically low most of the time.  I have seen the dow futures push up 100 pts in 20 minutes with maybe an 8-9 point max retrace the whole time.  Sure this happens - but not this often as it does now.

Whether any of these are true, or a combination, I have no idea and we may never.  All I know is the trading action is very odd and I expect at least half if not more of this gain to be gone when this is done.Note that I am not predicting a top in the market, I am simply stating that what goes up almost always goes down - and the down is usually painfull.  We could hit 9k, 10k etc.  I really dont think 10k is possible, with GM dust, C is dust and a few others they just dont have the fuel for the DJIA to actually push up that high in the short term.

Maybe everyone just needs to learn to trade again - this is the new market to stay!