What will it take to upset the stock market's persistent momentum? That's the big question I'm asking as we enter 2017's final month.
Market timers keep looking for a news event that will trigger a reversal, but nothing seems to bother this market. A North Korean missile launch and a comment by President Trump that "we will handle" the situation caused a reaction on Tuesday that didn't even last an hour before buyers jumped in on news that tax policy was moving forward in the Senate.
A number of bears have been predicting that difficulties with tax policy would be a catalyst for a turning point, but Congress has progressed quite quickly and the market simply wants a bill passed. The details have been shrugged off as secondary to showing that the Republicans can actually accomplish something.
The other big news event this week was the hearing on Jerome Powell's nomination as Federal Reserve chairman. Powell's comments indicated that he was on track to normalize interest rates, which boosted bank stocks. Market players rotated out of the big-cap FAANG names and into financials, which kept the recent rally running.
The indices might be a little extended technically, but that isn't a major problem, as the rotation under the surface is preventing many individual stocks from becoming overheated. Some of the stocks with the hottest momentum during Thanksgiving week have also been correcting over the past couple of days, and that's helping to create buying set-ups.
Cryptocurrency and blockchain are in a frenzy phase right now, with very loud debates about the potential for a crash, as the group has made a parabolic move. Risk is obviously quite high, but it's extremely dangerous to underestimate how long this boom could last. It's a good thing for the bears that there's no easy way to short bitcoin, as that would add even more fuel to fire. I'll be looking for some trades in this group as the volatility continues, but as I discussed earlier this week, I'm avoiding predicting a top for cryptocurrencies.
Overall, the main challenge of this market right now is navigating the rotation that's taking place. We have the Dow Jones Industrial Average outperforming, while the Nasdaq 100 ETF (QQQ - Get Report) is lagging. The Russell 2000 ETF (IWM - Get Report) is doing well because of small banks' strength, but there's daily rotation in other groups such as biotechnology, oil, China-related names and technology.
My game plan is to continue to embrace the momentum in the indices by staying focused on bullish set-ups in individual stocks. A shorter-term time frame is preferable due to the rotation and the high level of volatility in the more-speculative cryptocurrency names. Names such as U.S. Global Investors Inc. (GROW - Get Report) , Square Inc. (SQ - Get Report) and Overstock.com Inc. (OSTK - Get Report) are high on my list of trading vehicles, but there are also more conservative set-ups, such as Twitter Inc. (TWTR - Get Report) or my Stock of the Week, Camping World Holdings Inc. (CWH - Get Report) .
Stay nimble, vigilant and open-minded. Conditions are good for traders, but market risks are high.
(This column originally appeared on Nov. 28 on Real Money, our premium site for active traders. Click here to get great columns like this from Jim Cramer and other writers even earlier in the trading day.)
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