Friday 2 August 2013

Starting the month on a high

After two weeks of chop, the sp'500 finally broke the elusive 1700 psy' level. The big monthly charts are still outright bullish, but we're now in overbought territory. Another multi-week down cycle would be very natural, and yet do little damage to the primary bullish trend.


sp'monthly3, rainbow



sp'weekly8 - mid term bullish outlook


Summary

That is certainly one way to start a new month, with new historic highs for many US indexes!

The bulls, not least the cheer leading maniacs on clown finance TV, are filled with optimism for the rest of the year, and indeed into 2014. After all, QE continues, and even the thought of a 10-25bn 'taper' at the FOMC of Sept'18, doesn't seem to be a concern for the mainstream right now.

There are of course a great many other issues looming, not least the US debt ceiling, the German elections (where I'm still guessing Merkel gets the boot), and the underlying weak growth.

For the moment though, the daily, weekly, and monthly equity charts are all 100% bullish. There is simply nothing for the bears to tout as particularly bearish.


Tired of the upside

With todays index gains, I am indeed growing tired of this market again. When was the last decent down wave? Well, it was a mere six weeks ago, but it feels like more like months.

There remain some 'interesting parallels' to the situation we saw in summer 2011, and indeed, I'm keeping such a scenario in mind. I certainly think the RSI's -relative to the price action/waves, are worth noting...


sp'weekly9c - the 'bearish outlook'.


As I will keep saying in the weeks ahead, the only point where we'll know if the above scenario has a chance, is when the sub wave'1 low is taken out..after a wave'2 bounce. Even if that scenario were to play out, we're looking at late Sept/Oct..at the earliest.


Looking ahead

Friday will be all about the monthly jobs data. The market is seeking a slightly lower 7.5% headline rate, and 175k net gains. Those are not bold targets, and I'd guess they will be exceeded, with the market rallying on 'good news is good news'.

There is also personal income/outlays and factory orders.

*there is ZERO QE-pomo tomorrow.
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For those bears out there already holding short positions, today was indeed a rough one. Dare I say...hang in there, just a few more days.

*I am indeed on the sidelines, and seeking to short the main indexes, in the sp'1715/25 zone, which I might do as early as Friday morning. Even then, it will depend on the style of price action, and if I feel comfortable to take a short position across the weekend (not something I generally like to do).
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Goodnight from London