SPX rallied for the 10th time in the last 12 trading sessions. A rally that is as good as any we have seen over the past few years, except this rally established new all-time highs, and still hasn’t stopped yet.
Terrorism struck again, this time in Nice, France. Absolutely, and utterly disgusting, the waste of human life at the hands of people that are no different than Adolf Hitler.
Nonetheless, the market seems unconcerned by the attacks, rallying higher this morning, despite the world breaking at the seams.
The current trend-line of the market is unsustainable. It is in need of putting in place a higher-low that flattens out the trend-line some.
SPY volume increased from the day prior but still slightly below recent averages.
Plenty of gaps on the SPY chart remains unfilled.
5-day moving average is a good barometer of the strength of the current rally. As long as it stays above this moving average there is very little reason to get net short on this market.
VIX dropped below 13 yesterday which is a big positive for the market – needs to see additional downside follow through today. I wrote about the significance of this VIX Support level here.
SPX 30 minute chart – continues to trade hard to the upside with little to no pullback.
I could easily see a pullback to the 2120 level which was the breakout area for this market, in the coming weeks, without ruining the upside potential of the market going forward.
At this point, and with the election ahead, I’d expect the market to keep rallying higher. I don’t expect there to be a rate hike between now and the election. To do so would impact the market and thereby the election. I don’t think the Fed wants that.
There is a great deal of bullishness to this market right now despite the prevalent amount of worry. It has been over two years since the market has actually seen a legitimate rally and so it wouldn’t be surprising to see this market continue its current trend higher as shorts are forced to face the new reality of the market.
Market is assuming that rate hikes are pretty much off the table for all of 2016.
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