This blog post originally appeared on RealMoney Silver on Oct. 20 at 7:29 a.m. EDT.
"Every object in a state of uniform motion tends to remain in that state of motion unless an external force is applied to it." -- Newton's First Law of MotionAs I gazed at the S&P 500 futures early Monday morning (around 2:00 a.m. EDT), they were down by about 6 points. Upon waking up at approximately 5:00 a.m. EDT, the S&P futures were 7 points higher. By the time Apple ( AAPL - Get Report) released its blockbuster results, the S&P futures were up by about 12 points, for a gain from the morning's nadir of nearly 20 points. This all-too-familiar intraday reversal in which stocks finish at or near their highs has occurred with regularity and has been punishing for the bears. It has happened in the face of both good and bad news, corporate or economic. Arguably, the market has begun to decouple from fundamentals; instead, liquidity has overcome almost any other influence as every little setback has been countered with an avalanche of buying. It has fed upon itself, and it has contained corrections as many money managers play catch-up and chase strength. Hedge funds, in particular, are moving in; according to ISI, net exposures (at 51) are at a new post-March high. Even technicals have taken a backseat to liquidity. For example (as my favorite technician reminded me), the recent two-week rally has been accompanied by a low put/call ratio (0.52). The last time the equity-only put/call was this low (summer 2002), a six-week correction ensued. Surprisingly, the March-October move (which has not let the bearish in) has been almost a mirror-image of the previous decline (which did not let the bullish out). The latter move culminated in capitulation, and the current will likely move in a similar exhaustion phase. Frankly, even if this sequence is repeated, it's hard for me to have a good sense as to how close at hand that final move is. That said, the trend-followers have had a field day, and, quite frankly, what I have learned from the past few months (among other things!!) is that Jim "El Capitan" Cramer is one of the best bull market players I have seen. He has been unbowed and has played the game picture-perfectly. At least I got an assist early on. Doug Kass writes daily for RealMoney Silver , a premium bundle service from TheStreet.com. For a free trial to RealMoney Silver and exclusive access to Mr. Kass's daily trading diary, please click here.