The bulls are winning, but they shouldn't relax

Mid-week market update: On the weekend, I wrote that the stock market was experiencing a bullish breadth thrust and the market is likely to see a series of "good"overbought readings where stock prices either continue to grind up or consolidate sideways as they get overbought (see RIP Correction. Reflationary resurrection next?). So far, so good. The market seems to be behaving according to the script I laid out so far.

As the hourly chart of the SPX shows. The market weakness on Monday and Tuesday were relatively minor. The index saw a minor positive RSI divergence and the 50 hour moving average has so far acted as support.

As well, this chart from IndexIndicators show that the net 20-day highs-lows, which has been a good intermediate term (1-2 week) trading indicator, seems to have found support at a high level. If this continues, it would lend support to the "good"overbought bull case.

While I remain optimistic about the technical underpinnings of the bullish scenario, that`s only half the story.

The full post is at our new site here.




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As a reminder, here is a sample of some of past posts:

• Why I am bearish (and what would change my mind) May 2015
• Relax, have a glass of wine August 2015
• Why this is not the start of a bear market September 2015
• The reason why the bulls should be cautious about a January hangover December 2015
• Why this is a correction and not a bear market January 2016

I am reminded of a variation on an old adage:

If you give a man a fish, he'll eat for a day.
If you teach a man how to fish...he'll want to get a boat.

We would love to have you join our community. We stand ready to help you build your own boat. Come over to the new site and take a look.