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The market has finally followed through on the pullback we were expecting to the 2335SPX region from 2400SPX, as we have outlined. The structure of the market over the coming week will likely tell us when the next 200-point rally to 2500SPX takes hold.
This past week, I read an article by a writer that has been decidedly bearish the stock market for quite some time. In his latest missive, he reiterated his position that the stock market is disconnected from the fundamentals of real world dynamics. And, then I read another article stating outright that this market is dangerously overpriced.
They seem to be no different than most analysts today claiming that the market is not being driven by fundamentals at this time. And, yes, I simply love that statement. It just makes me chuckle every time I hear it. It is no different than saying that the steering wheel is not driving a remote-control car. Well, of course it isn’t. It never has.
As Jeff Miller appropriately summed it up in his recent update: “Most pundits, media, “smart money,” experts on valuation have been completely wrong for many years.”
Maybe because it’s I am a Knight, but I don’t think any single book, play, or other work of art has had more influence on my worldview than Camelot. That may seem ridiculous, but it’s true. Below is the production HBO did of it back in 1982 with the marvelous Richard Harris, and I’ve watched it countless times. Enjoy:
SPX filled the gap from Friday’s close yesterday afternoon, but there is still more to be done to confirm the low. The next test up on SPX is to break the 50 hour MA, currently at 2354 and SPX is testing that at the moment. If broken the next levels are an intraday higher high over the last rally high at 2358.92 and a daily close over the daily middle band, currently at 2367. The 2359 high is a possible IHS neckline so we could see a right shoulder retracement there. If so the ideal right shoulder low would be in the 2336 area, with the 2333-6 area being decent established support. SPX 60min chart: