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First, a warning: I’m going to be on a whirlwind across-the-country trip tomorrow, so I will probably not be as prolific as normal. In the span of 24 hours I’m going to fly across the U.S., have some meetings, and fly all the way back home. Ugh. But I wanted you to know.
Speaking of “ugh”, the markets continue to creep higher, sometimes a lot, sometimes a little. Today was one of the “little” days. The overbought indicators are very stretched, as you’ll see below, but overbought readings can stay overbought for a long time. They are by no means a guarantee of a reversal.
If you read my post on Friday talking about the rising channel on SPX that could deliver an all time high retest within weeks, then you know what I see as the key support level on SPX and that is of course that rising channel support trendline, now in the 2750 area and rising at about 42 handles per week. Until that breaks there’s really not much to talk about on the short side on equity indices.
I would note the resistance area above that is the last really significant resistance area before a retest of the all time high. That area is the ceiling established by three rallies Oct-Nov last year and those three highs were all in the narrow range 2800-17. A break and conversion of that area clears the way for the possible all time high retest that may be coming soon, and SPX is now getting close to retesting 2800.
If there are ANY bears left out there – – and I’m having my doubts – – there’s getting to be precious little room left until there’s essentially no hope. And by “no hope” I mean “central bankers will just keep pushing this thing up year after year until it stops working, which could be decades from now.” Here are some major cash indexes and their lines in the sand:
I can’t feign surprise at the market getting bid up right out of the gate this morning. It’s the New World Order. Looking at some ETFs, there are a few interesting areas of strength. One, broadly speaking, is commodities, although I don’t think the potential from here is substantial. I’ve tinted what I think is a reasonable target area.
The champion of stock market bulls these days is thrice-married buffoon Larry Kudlow, who – – whenever the market is falling – – is rolled out to utter some kind of banal bromide to calm everyone down and convince them to keeping buying equities, irrespective of valuation metrics. And, frankly, it keeps working. Last week during a big morning selloff, Kudlow saved with one word: “glitch.” He completely dispatched a raft of valid economic data by shrugging it off as a glitch, and markets went soaring.
Personally, I think Larry Kudlow is an amoral, feckless nimrod. But allow me to use history, and not just my own debased opinion, as evidence. I present to you some gems of Larry’s past, just so we can see how prescient this chap really is.