Trend followers are happy, despite plenty of problems.
Lousy weather in the Midwest and Northeast, a port slowdown in California, a cease-fire that never was in Ukraine and protracted negotiating difficulties between Greece and the European Union.
You'd never think it, but despite these problems we are at new highs on big caps (S&P 500), midcaps (S&P Midcap) and small caps (Russell 2000). Even the broadest measure of the market—the Wilshire 5000—set a record on Friday.
Following relative strength is a time-honored tradition on Wall Street, but as the fundamentals have gotten more confusing since the financial crisis many more have turned to technical analysis to try to figure out when to get in and out of the market.
Piper Jaffray wrote, "The wait for a directional move seems to be over," noting not just new highs in the major indexes but also the recent improvement in breadth.
Even Europe is looking better. The Europe STOXX 600, a basket of the 600 largest stocks traded on the major exchanges of 18 European countries, is sitting near its highest levels since 2007.
I have no problem with trend following, as long as there is something fundamental behind it. But I have been troubled by the trend in earnings for several months, and it is spilling over into Q1 2015 from Q4 2014.