It catches you unawares. You are in a safe mode, with huge cash position, ready to trade ranges. Then you find yourself in the middle of the massive rally, forced to by something, anything in order to make money.
As usual, I might be wrong. Often I am. But all metrics are aligned too well.
Fundamentals are good. Most companies report good profits. Yes, US growth is slow, Europe is probably in recession, we don't know what's going on in China and developing world is struggling a bit. But in the stock market, fundamentals are about profits and profit growth, not about the whole economy.
Technicals are excellent. Charts are beautiful. All three major indices are trading above 13-, 50- and 200-day averages. 13-day average is above 200-day MA, and 50-day MA is closing on 200-day. Market is a little bit overbought, but overbought condition can be worked out either in price or in time.
Sentiment is incredibly bearish. Most pundits tell you to be careful, to preserve capital, to avoid bull traps, yada, yada, yada. Only Doug Kass is bullish, cautiously. Nothing can be better for bull market.
Market reaction is great as well. Good earnings are bought (with rare exceptions), bad earnings are sold for a day, without follow through.
Possible problems? Well, best technicals usually happen at market tops...