In the short-term, we still have the risk of a modest correction. There is typically the false move before the breakout. There is little question that there has been low volume over the past couple of years with light on up days and higher volume on down days. This has been the constant attempts to short the market that causes the grinding rally. The retail speculators who are the typical buy high sell low crowd are still absent. This seems to be caused by the perpetual bearishness among the retail “advisers” and the typical mainstream press.
Yes, there has been the company repurchases, but even this has not sparked a lot of piggy-backing one expects in a bull market. Then there is the foreign central banks that have been active buyers pushing the market higher just trying to diversify. Therein lies a WARNING. Why are central banks buying stocks? (1) To diversify away from sovereign debt that they know is a huge problem, and (2) the diversification away from just dollar bonds given the lack of any alternative currency. Even Russia is smart shifting issuing their debt in dollars to euros. Why? The dollar has a risk of new highs while issuing debt in Euros has a better chance of depreciation.
Then we have the rising risks with Japan. There is a strong correlation between USD/JPY and S&P futures. What is this about? Again, diversification if war appears on the horizon with Russia and China. The risks of capital flows into the US equities remains high, but more so after September this year.
The Fed wants the stock market to rise so they can raise interest rates. They need higher rates in order to have room to lower them when necessary. We most certainly live in interesting times.