Last week’s close gave the S&P its first 3 week winning streak in 3 months, in the process putting the recent Investor Cycle Low firmly in the rear view mirror.  It looks as if we now have a continuation of the dominant trend on our hands.  I’ve noted on numerous occasions just how stretched the current Yearly and cyclical bull market Cycles have become, but it’s impossible to ignore the strength of the current runaway move. 

The current conditions appear to be mirroring past cyclical market tops, with valuations ceasing to be a consideration for buying.  At the end of every bull market, the fear of missing out, of being left behind, becomes the dominant fear.  This couldn’t be more evident than in Facebook’s purchase of messaging provider Whatsapp.  I don’t know what they were smoking in the Facebook conference rooms, but they paid $19 billion for a business that has 60 employees and virtually no revenue.  That is the very definition of business insanity, found always near the top of great bull markets.

Toward the end of every cyclical bull market, fundamentals no longer matter.  Instead, a collective and self-reinforcing speculative rally grows in statue as a market climbs to its peak.  That’s where the equities market finds itself today, caught in a 2 year runaway move that either continues to accelerate higher or stalls and reverses.  At this point in the current bull market, a move like the current one will eventually end at a major market peak.