SPX = 1996 Chicago Bulls

The parabolic rally continues.  The S&P 500 acts like the 1996 Chicago Bulls, crushing all opponents in its way.  The coronavirus just added more monetary fuel to the fire, and has probably extended the bubble by a few more months.  This time, the crowd has it right in regards to the coronavirus.  They aren't buying it as a sustained negative, unlike the fearmongers out there who will always find a boogey man under the bed (U.S./China trade and repo in 2019, coronavirus in 2020) to get negative.  The coronavirus is a net positive, because it is mostly contained to China, and has prevented global central banks from doing any kind of tightening and instead has increased the odds of more easing this year. 

That is why you are seeing 10 year yields near the lows of last year, as bonds rally with stocks and only the industrial commodities have been sacrificed at the altar of the market gods, a pittance compared to the stock and bond markets. 

Just as it has been since the Greenspan bubble days, the financial markets are under control of the Fed, who got scared stiff in 2019 and the coronavirus is another excuse for them to probably ease again this year.  Without a coming recession, Fed rate cuts are usually a market positive, because the market is getting both lower rates and while maintaining earnings.  That is the type of market environment, a dovish Fed with steady earnings that feeds the animal spirits and blows bubbles.  Yes, the valuations are getting to ridiculous levels but until the bond market starts showing weakness, there is nothing for the equity bulls to be afraid of. 

Eventually these kind of parabolic moves with excessive stock valuations end badly.  But leveraged traders can't take a lot of heat so the timing has to be right in order to profit.  With the Fed ignoring financial stability risks of a growing stock market bubble, things can continue to get even frothier before things fall apart. 

Based on backtests since the Fed started QE, the best predictive tool for the SPX is 10 year Treasury yields.  Treasury yields rising over a 3 month period have been a leading indicator of future SPX weakness.  We are nowhere close to that scenario now.  That is why I wait, even if the uptrend seems irrational and unsustainable.