Larry’s Note: Fellow editor Chris Lowe and I sat down for another of our discussions earlier this week. This time, we tackled the epic moves the market has been making in recent weeks.

The melt-up is perplexing… and a little concerning.

That’s why I always remind readers to stay nimble and never put more into trades than you can afford to risk. Moments like these can throw traders for a loop if they aren’t careful.

I hope you enjoy a piece of our conversation below. And if you have any questions or comments, I’d love to hear from you at [email protected].

[Editor’s Note: Transcript has been lightly edited for clarity and brevity.]

Chris Lowe: Larry, we were just talking about the market and the melt-up. So tell folks what’s been going on.

Larry Benedict: The market is accelerating to a buying panic, which is something you rarely ever see. The S&P has only had two down days since October 27th, and the Nasdaq is going to an all-time high. Everything is exploding. They’re happy about the consumer price index (CPI) inflation number, I guess.

I believe that the market will cool off, but it’s definitely proving me wrong. Right now, the market moves have been kind of epic. The 10-year note hit a high of 5%, slightly over 5% in October. It’s now 4.43%. You don’t see a move like that in years.

Chris Lowe: I got you. We talked about September and October typically being shaky, and then typically, you get this rally into the end of the year. Is that one of the reasons this is happening? Is it just seasonality?

Larry Benedict: Yeah, I think it’s a little bit of seasonality. Obviously, they’re harping on good numbers. The V-bottom has been extreme. We went from 4,300 down to 4,100, and now we’re at 4,500. So we’re within scratching distance of the highs.

So these are times where, if you don’t have a lot of long positions, you don’t want to buy into this. But you don’t want to really short it either because it’s just at a fever pitch right now. The market is just rip-roaring. You just have to step to the side here and wait for it to play out, and we’ll see what happens.

Chris Lowe: Larry, one of the things that occurs to me is that obviously, wars don’t seem to turn investors bearish because we had the attacks in Israel and Israel’s response. It’s very grim over there, but the stock market in the U.S. just brushed it off. I mean, how does that read to you?

Larry Benedict: Well, they’re brushing off everything. I think the war is one thing that’s not slowing down by any means. Last Friday, Moody’s downgraded our rating to negative. The market didn’t care.

So this market is a little bit scary.

Chris Lowe: All right, Larry, is there anything that you can think of that will sort of knock this bullish run off its course? Is there something looming?

Larry Benedict: I think there’s a lot of stuff out there that potentially could derail the tape. Timing is everything.

But it’s coming into the end of the year, as you know. People are figuring out how to finish out the year. And a lot of hedge fund managers are not performing well, so it’s going to be very interesting to see how the year shakes out.

Chris Lowe: Larry, is that what they call window dressing on Wall Street? [Note: Window dressing boosts reported performance. It aims to give the appearance of better returns – often by deferring losses to later time frames.]

Larry Benedict: Yeah, we usually see it in December, but we’re seeing it a little bit early. I think too early.

Something is looming out there. The market is running on extremes. I mean, I’m looking at the Nasdaq (NDQ). It was up 20% year-over-year on October 26. Now it’s up more.

Chris Lowe: Wow. I didn’t know the move was that big. And to put that in context, that’s typically a year’s worth of gains, right?

Larry Benedict: It’s double the average yearly gain of NDQ over the last 30 years. So things are looking interesting, for sure.

Chris Lowe: Okay, Larry, we’ll leave it there, and hopefully we’ll have some more insights into what’s going on on Wall Street next week. It’s been pretty crazy.

Larry Benedict: Alright. Take care, Chris.