The idea that traders are ultimately driving the market is now no longer supportable. Traders can drive short term trends. But there are two factors that are maintaining an upward pressure:
1) Mechanical investors. People like me. People who invest in broad index funds on a regular basis REGARDLESS of what the market is doing. Market up? Buy. Market flat? Buy. Market down? Buy. Always Be Buying. The idea is simple.... if I need the money at some future point, then don;t sweat ashort twrm trends... the long term trend is up and to the right. Estimate are that mechanical investors are between 30-40% of the trade volume. Pretty powerful.
2) Buy the Dip automation. Lots of investors, both retail, and professional, have automated "buy the dip" algorithms. It's why we're seeing such strong V-shaped recoveries. When the market takes a tumble, automated routines are monitoring for "buying opportunities." When the market drops far enough, these automated routines trigger buying. Lots of it. Up goes the market. It forces a general reversion to the mean.
Does that mean there can't be crashes or bear markets? No. Systemic failures can still cause those. But I'm not sure that the ordinary bear markets will be nearly as common. The other factor? Inflation. If inflation spikes (see 2022), some larger investors will avoid equities in the short term, shifting to other assets until inflation subsides.
So my thought is that I ignore most market flucuations. I've been ABB through all this mess. BUT... I'm keeping an eye on inflation. So far, inflation has not spiked quickly. But that could change. If it does, I may consider a shift to less sensitive assets for some portion of my portfolio until the orange asshole is finished ruining the economy.
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