The primary trend has been up for over four years now, and there remains absolutely no sign of it ending. With the Fed still doing $85bn of QE a month - along with other central banks, the bears face months, perhaps a few more years of waiting for a significant wave lower.
sp'monthly6c, rainbow - hyper bullish outlook
Summary
Indeed, the scary outlook for the bears is that this QE-fuelled rally continues for another
2-3 years. When the next major down cycle of 12-24 months does occur, we
might be starting from levels that are double from where we currently
are.
The above chart is just one of many outlooks I am keeping in mind. After all, if the bears - even yours truly, have learnt anything from the last few years, its to keep more than one scenario in mind, especially when that single outlook is a bearish one.
*Regarding the above chart, its an outlook that is greatly shaped by the ECM cycle (Armstrong, M.).
Primary trend remains higher
However you might like to count the last few years, the current trend remains unquestionably upward. What is especially interesting in the past seven months is the near relentless melt higher. I've little doubt this is due to the new QE-pomo program, - and aided by the default 'melt higher' of the HFT algo-bots.
Baring an end to QE-pomo, this market is going to keep on rising for months...if not the next few years.
A few other scenarios
sp'monthly6
Scenario D is an especially attractive one. Its been twenty months since the last significant fall, so we're more than due a major retracement of 15/20%. Yet, I have to conclude and note that unless the Fed end QE, any hope of a significant wave lower should be put on hold.
**Bonus chart
sp'weekly2, rainbow
I just wanted to add this to highlight the issue of the rapidly rising lower bollinger band. It was sp'1428 last week, and is now 1449. So, its rising at roughly 20pts a week. By the end of June, it'll be around the 1550s. That is a mere 80pts (5%) lower from current levels.
Based on all recent down cycles, that is the 'best case' for the bears, which frankly is an utterly depressing outlook for this summer/autumn.
Looking ahead
There isn't much data tomorrow. Best guess, we open a little lower, but battle back higher across the day. Tuesday is a 3bn POMO day, so the fuel will be there for those algo-bots to melt it higher, so long as there is no significant selling volume.
*One last thing, I realise such bullish charts will annoy many out there, but thats just how I see the market right now. I won't shy away from posting such heresy. If it takes another 2-3 yrs for this nonsense to break....so be it. I will be here. In the meantime, what is imperitive, is to survive further months (even a few years) of bullish hysteria and mainstream delusion.
Those bears that are still around when the next big down cycle comes, it will be beyond the dreams of Avarice.
Goodnight from London
