There is an air of complacency in the market as fear no longer exists, unless one considers the fear of missing a rally. Bad economic numbers, sovereign spreads blowing out, currency wars, commodities surging? No problem, QEII is on the way.
Complacency is a very dangerous emotion in the stock market but that does not mean that the market is necessarily headed lower. Complacency only becomes dangerous once major investors have high equity allocations. This rally started 22 trading days ago at which time pessimism was widespread and equity allocations were low. Is 22 trading days enough time for the crowd to re-risk? I suspect that they still might have some firepower left.
I much prefer to buy at times when fear is widespread like at many points during the Summer. I have little interest in new purchases right now. But knowing that this rally started off of a base where the major players were de-risked, I am going to continue to err on the side of caution and give the rally room before trying to fight it. By late next week the rally will be thirty trading days old and the turn of the month will have passed. Better to wait and fight a tired, complacent bull.