The S&P 500 continues to do no wrong. After a huge run to start the month of December off, this entire week has been spent consolidating that gain. There is not even a pullback to the 10 day moving average at this point. Despite some loss of leadership from 'the generals' of 2010, and some degradation in underlying breadth measurements the idea of we can't lose is alive and well. The information stream of the past few weeks has been almost uniformly positive (excluding that monthly labor report), and the U.S. just 'bought' itself an extra 0.5 to 1.0% of GDP for 2011 with the tax + spend stimulus package. There are no worries about the inflation situation arising in emerging markets, and Europe continues to commit to ever bigger bailouts as the global moral hazard explodes. But it's all good for the speculator class. I expect the performance chasing community to not allow much of a drop off going into year end and then we know the first day of the month is almost always a winner... it will be interesting to see what happens in weeks 2 and 3 of January. At some point good news is supposed to be discounted and at this moment we have discounted Goldilocks.... no (government reported) inflation, and bought and paid for GDP growth.
A few straggling bears must still exist but only below Ben's show on their neck.