This rally is predicated on a continuation of cheap money flows from the Federal Reserve and other global central banks. It’s hard to see the Fed delivering better news on that front than the financial markets now expect. The consensus is calling for the Fed to refrain from cutting back its purchases of $85 billion-a-month in Treasurys and mortgage-backed assets until March (or maybe May, depending on what survey of economists you read). A decision by the Fed not to taper at the Oct. 30 meeting of its Open Market Committee is mostly baked into stock prices. A December no-taper decision at the meeting that month is mostly in the consensus, too. Getting the results that everybody expects will remove a bit of residual worry from the markets.

But this isn’t enough fuel to move keep the melt up running.

I can see three possible sources of fuel that could prevent this melt up from ending badly.

First, some other big central bank could step up its stimulus plans. The Bank of Japan probably doesn’t count, since it is already committed to a massive weakening of the yen through big asset purchases. The European Central Bank could decide that the absence of inflation in the Eurozone -- and low growth in Europe -- justifies a cut in interest rates from their already historic lows. But given that bank’s history on fighting inflation, that seems relatively unlikely. The People’s Bank of China could abandon its efforts to rein in growth, dampev financial speculation and control inflation and shift back to stimulus. However, that bank has been relatively miserly about adding liquidity to the system in recent months, so I don’t see it making such a huge shift in policy soon.

Second, the U.S. economy could show higher-than-expected growth. Nothing in the data right now points in this direction; housing numbers and forecasts on auto sales, for example, look weak. Granted, recent data isn’t especially reliable thanks to the games in Washington in the last month. But with a replay of those games possible for January and February, it’s hard for me to see a spurt in U.S. growth in the fourth quarter of 2013 or the first quarter of 2014.

Third, investors could get an end-of-the-year present of unexpectedly strong growth from China that suggests that China’s growth rate for 2014 might be significantly above the 7% to 7.5% range. Good news from China would be big enough to move global financial markets, since Chinese demand is the driver for so many sectors of the global economy. We have seen signs in recent numbers that China’s growth rate has stabilized in that range, but it’s tough to see much in the way of solid evidence that growth is about to stage a meaningful acceleration.

Could we get good news -- or at least news that would support an even more hopeful read of the future than the markets have now? Absolutely.

Do the odds favor that kind of news outcome? Absolutely not.

So what’s an investor to do?

A strategy for this melt up

This leaves investors and traders with the conundrum that they’ve faced all year. If you do even a cursory Google search on “warning indicators” or “excessive valuations” for 2013, you’ll pull up lots of examples of posts and stories from earlier in 2013 pointing out that the market is cruising toward a fall. But the market has kept climbing past all those worries to a gain of 25.4% for the year -- and without a single 10% correction.

Overvalued markets can get even more overvalued. Warning signs can blare for an age before the danger they warned of materializes.

After talking to investors and traders and money managers at the recent Toronto MoneyShow, I’ve come to this conclusion: The real difference between bulls and bears in this market is timing. Bulls believe the current rally will run into the spring. Bears believe the current rally run for a while and then end badly.

Nobody that I heard was predicting -- no matter how negative they were about the eventual future -- that we were looking at disaster tomorrow.

So what do you do?

Now, it is certainly possible that the fact that nobody is expecting disaster tomorrow is an indicator of disaster tomorrow. But I tend to think tomorrow is a bit soon.

I think there’s still enough worry about the Fed in December, and about near-term economic growth, to end the melt up sometime during that month. But I wouldn’t discount greed—a lot of professionals on Wall Street won’t abandon this market until a clear break in the trend forces them to do so.

I think riding this trend is reasonable on a risk/reward basis through mid-December. If you are going to go with the melt-up, buy your ticket now. There is no point in waiting to play the trend until it’s even older.

If you want to extend the potential life of this trend, you can consider what many Wall Street professionals are doing now and look for undervalued markets that haven’t melted up quite so strongly in the last few months. That’s one explanation for the recent strength in the Korean and Mexican markets. The iShares MSCI Mexico ETF (EWW) was up 3.77% in September and the iShares MSCI Korea ETF (EWY) was up 7.46% in that month. A caveat: I’d expect that if the U.S. market corrects, most other assets, especially risk-on assets, will correct as much or more.

In early or mid December, however, I’d re-evaluate the risk/reward ratio of staying with the trend. If it still looks like the melt up in solidly in place and you can see some positive catalysts for a move higher, stay on board. If you can’t see any catalysts and the risk indicators are flashing an even angrier red than they are now, I’d certainly look to start cutting back on some of the riskier holdings in my portfolio and to begin taking some profits in individual positions.

Remember, you’re not trying to time a top exactly. But you would like to stay on the right side of the risk/reward ratio.

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At the time of publication, Jim Jubak did not own shares of any of the companies mentioned in this column in his personal portfolio. When in 2010 he started the mutual fund he manages, Jubak Global Equity Fund, Jubak liquidated all his individual stock holdings and put the money into the fund. The fund did not own shares of any stock mentioned in this column as of the end of June. For a full list of the stocks in the fund as of the end of June, see the fund’s portfolio here.

The last Jubak’s Picks column on MSN Money will run on Nov. 13. Jim’s free web site will continue to offer the same mix (frequently with more daily content than MSN Money ran) of big-picture posts, stock picks and portfolios. You can also find his columns at If that doesn’t fill your Jubak needs, you can get a free seven-day trial and $100 off a yearly subscription to Jubak's premium investment letter JAM by clicking here.

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