I could honestly finish this report with the following statement. As long as we're trading above 2100-2134 on the Sp 500 the trend is clearly higher with pullbacks along the way to unwind. That's it. The truth is there for you to see. It took forever to make the breakout and now the bulls are not going to walk away from it. They will defend bad and pullbacks with everything they have. The market went nowhere for basically two years and now the bulls get to enjoy the fruits of their patience. They held in well enough to lower the bull bears spread but at the same time keep the market from getting slaughtered. We've been in SPY since the breakout across the 2,100 area and will continue to give room and time given the lack of overhead price resistance and big picture base breakout move which measures significantly higher. It will likely take a bearish engulfing candle or blow off top move to shift the tide off our Weekly charts.
That said, much of the credit for this bull market goes to the central bankers of the world with Janet Yellen leading the way. The totally planned bull market has worked as intended. Low rates forever plus enough qe liquidity and it's off to new highs and beyond. She will decide when the bull market has had enough froth. Either that or the bull bear spread will get back to the mid and upper 40's once again and that too will end the upside for a while. She'll probably wait for the froth to take us down thus leaving the door open for low rates even further down the road. She knows what she's doing with every move carefully calculated. She knows things aren't really good globally thus let this market run for as long as it can thus creating as much wealth as possible. The more wealth people have the longer our economy can hold up while other countries struggle along. She's done the job inappropriate as it may be punishing some groups like savers at the benefit of others. Her next problem will be what to do when this all comes crashing down years down the road. She's clearly not worried about that at this moment in time. She's trying to buy time and pray that the global economy somehow gets rocking back up. If it doesn't happen there's always new tricks like negative rates, etc but we shall see how this all plays out in the years ahead. For now she's happy but nervous. She knows at some point she'll need to see a global recovery taking place or this whole phony bull market will make everyone pay a nasty price. Day to day.
The weekly charts show the breakout did continue onward. Not a resounding move higher but up nonetheless. It's important for the bulls to put some distance so when we get too overbought it'll be easier to hold the 2100 Sp breakout level. Earnings have once again, overall, been terrible. One failure after another to the important economic leading stocks but once they get hit they bounce back because there's nowhere else to go. So bad isn't bad and good is great. Classic bull market action as froth builds. It would good to get 4-5% above the 2100 breakout level to show the bears they have no chance and to allow for some selling that would be good for unwinding. The Dow and SP 500 have made new highs for the better part of the past 3 weeks. The Nasdaq finally cleared its weekly base late week thanks to help from both the Semiconductor and Biotech groups (see enclosed charts). For now the bulls are in total control of the market. It'll probably take a lot more froth over the coming months before the market snaps down
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Peace,
Jack Steiman
Robert New
