Let's review the assumptions I'm taking into this holiday season. Most importantly, this rally has legs because of its time and location. I outlined my reasoning for higher prices a couple of weeks ago. Subsequent price action supports all indices breaking out to multiyear highs before this move runs out of steam.

We're looking at a performance-driven market in which hedge funds and mutual funds are bidding up prices the way they did in 2004. If past is prologue, the rally should start to fizzle out during December triple-witching. That's the time when hedging plays will be used to lock in annual gains.

It should remain a buyer's market until that time. New highs are expanding on both exchanges, but the influx of capital is greater in the Nasdaq and its speculative issues. This has been the key to the rally since it began in late October. Indeed, this is the rare environment in which buying high and selling higher is the right course of action.

Wrongheaded analysts have drawn their focus on prior 2005 highs, believing these levels will turn around the rising market. Specifically the S&P 500 index closed Friday near August and September prices that preceded sharp selloffs. But it won't happen this time around.

The concentration of stops above these price levels has become too attractive to be ignored. Once those stops are triggered, watch for a melt-up rally that carries the S&P 500 through 1300 very quickly. In the diabolical way things work these days, that's the real level to watch for strong-handed sellers to return to the market.