Bulls Push S&P, DOW to New Highs

The Dow Jones Industrial and S&P 500 averages pushed ahead once again to new, all-time highs on light volume.

Today's move follows yesterdays surge higher on Fed Chairwoman Janet Yellen's testimony which basically confirmed that nothing has changed, but someday, it will.

In other news, the IMF expressed concern that the market and related derivatives are funded with borrowed money and fear another 2008 scenario, with nothing but debt backing up assets.

This is the problem that many have with the market move.  Central Banks, world-wide continue to add liquidity to their economies.  Somehow, much of this new liquidity is finding a home in US markets.  This is clearly evident by reviewing a chart of UUP, an ETF proxy for the US Dollar.

Such strength in the dollar has not been seen in ages.  Dollar strength results in corresponding weakness in commodities such as oil and precious metals. 

So for now, it appears like "party on."  The Bulls are rejoicing.  And while it appears to be prudent to add some calls to take advantage of what appears to be the start of a new wave up, I'm not so willing to give up the put positions I hold going out through October and January. 

Perhaps the continual Central Bank liquidity will not end and even if it does, interest rates will remain at extremely low levels, resulting in never ending up markets.  But in the end, we know that this market has been created through corporate financial engineering (issuing debt to raise cash to buy back shares, propping up stock prices) and cheap credit.  Someday it will end and rising interest rates will not result in pretty outcomes.

More analysis over the weekend.  Unless we get a big selloff at the end of the day tomorrow, it appears my three-week test of the high scenario is no longer in play.