Like It or Not, the Trend's Still Up

"Never let your persistence and passion turn into stubbornness and ignorance."

-- Anthony J. D'Angelo,

The indices did a nice job of recouping some of the loss they suffered Friday but they lacked a little of the persistence and passion that has been the norm lately. Throughout the rally the dips have not only been bought but they have bee bought aggressively and with little second-guessing. The dip buyers showed up again yesterday but volume wasn't that great and the driving force seemed to be a decline in oil rather than a belief the market was going to run away without us.

Although seasonality has not worked in the past couple of months, we need to keep in mind that the last couple days of October and first couple days of November have consistently been a strong period. This probably has something to do with end of the October fiscal year and the kick off of the November through January period, which has traditionally been the best time of the year for the market.

There are probably forces at play to keep holding this market up but the big question is whether we have the juice to go higher. This market has had a tremendous run and is still in need of a rest. A lot of buying power has been used up in recent months and bullish sentiment is high, which means there are not likely to be high levels of untapped cash on the sidelines. We may see some inflows but funds and major market players are likely to have limited buying power at this point.

There is a strong temptation to look for this market to top out at any time. There is nothing wrong with staying vigilant and looking for clues about problems but we have to be careful not to jump too quickly at the first sign of a problem. Many bulls and bears are struggling with the parabolic move of the market and badly want a pullback of some type. Thus they tend to see major problems in even the most minor things and lose track of the simple fact that the market is still trending up.

Stay wary and watch for warning signs but keep in mind that this market still has done nothing wrong and even though it may look a bit tired we need to respect the fact that the bulls are still in charge. The bullish passion and persistence are still there but it can easily turn into stubbornness and ignorance after the big run we have had.

We have a slightly positive start as a slew of earnings reports are digested. Overseas markets were mostly up, oil is down again and gold is pulling back a tad after a run.

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James "Rev Shark" DePorre is the founder and CEO of Shark Asset Management, an SEC-registered investment advisory firm. He also operates sharkinvesting.com, an interactive online community that serves and educates active investors. DePorre holds business and law degrees from the University of Michigan, is a member of the Michigan Bar Association and a former tax attorney and CPA. He lives in Anna Maria Island, Fla., with his wife and two children.Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Rev Shark appreciates your feedback; click here to send him an email.