Why Do Stocks Keep Going Higher?

Recent US economic date has been mediocre as has been the earnings season so far.  So why haven't stocks reacted more negatively?  More important why so far have the seasonal patterns not kicked in?Here's a pretty good summation of why these events don't seem to matter right now from Business Insider.com:

Analysts have advanced at least two interesting theories{On what's holding up stock prices}.

1) Cash Return: "[D]uring the current earnings season, US corporations continue to announce dividend increases and more share buybacks," said stock market guru Ed Yardeni as he rationalized the rally. "Previously, I’ve shown that this corporate cash flow into the stock market--which totaled $2.1 trillion for the S&P 500 since stock prices bottomed during Q1-2009 through Q4-2012--has been driving the bull market since it began."

2) The End Of Austeriy: "Some traders ... think that the new rally really kicked in when news that a graduate student had found flaws in the Reinhart/Rogoff paper on the limiting power of public debt on the economy – thus casting doubt on that thesis," said UBS's Art Cashin. Cashin is talking about UMass grad student Thomas Herndon, who has basically turned the global austerity movement into a joke. Austerity has been a major drag for economic growth, especially in many of the developed European countries.

Look, I think it's probable that stock prices will experience at least a 10% pullback between now and Labor Day.  But I also have to say that there is an underlying strength to stocks right now that we haven't seen this time of year at least since the mid-2000's.   

*Long ETFs related to the S&P 500 in client and personal accounts.

Link:  Businessinsider.com: Why Stocks Will Rally Without the Economy.