Daily Archives: February 12, 2017

All Bid Up and Nowhere to Go (almost)

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Before I get into the Trade Idea, I’m going to review the context of the S&P500 from a structural standpoint and a typical deviation standpoint. First of all, structurally, the Weekly and Daily charts show higher highs and higher lows, the very definition of an uptrend. In November of 2016, the SPY completed a $20 wide trading channel of which currently price is a stone’s throw from its high resistance. The channel would suggest that buying potential is limited.

Now, anyone who hangs around the comments has seen that I use 5% simple moving average envelopes around a 100MA as a measure of movement potential (oversold, neutral, overbought). Where are we now? Yep, hit it on Friday. Again.  (Click on any chart to see a larger version).

170211 - 2year 100MA Deviation

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Cause for Bullish Cheer

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The bull market is eight years old. I have, for much of that time, been able to dig up myriad arguments for why its end is nigh, but none of those have transpired. Indeed, the good folks at Elliott Wave International seemed wholly convinced in 2009 that the bounce in stocks would terminate at about 1,000 on the S&P 500. Only about a year or so ago, after years of beating the bearish drum, they went hog-wild bullish, and they’ve looked sensible ever since. At this very moment, they are pointing to simply more lifetime highs on the horizon.

I’ve got to say, the reasons for being bearish are getting stripped down to almost nothing. We’ve got a clean breakout of the Dow Composite…

0212-comp

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