No Foolin’

You can say what you want about the news tape. You can parse the economic data. You can look at the yield curve. And in spite of it all, the technical pattern is looking more and more like a re-test of the 2019 highs will be tested by the SPX.

SPX futures are indicating a spike higher at the open. This after the index has been consolidating around the 2800 level since late February.

Last week’s close above 2800, along with this morning’s futures pop, are a good indicator the that March 21 highs of the year will be tested (and likely surpassed) today.

If this occurs, it’s probable 2800 shifts from being the previous resistance level to the new support level. This gives the SPX the opportunity to push higher, re-testing last year’s highs, and possibly going even higher.

It would take a genuine shift in both economic data and policy to change the trend if this breakout occurs. For the time being, this can almost be called a stability bonus. Even though most media outlets like to stir the pot, the news narrative has not materially changed. And, more importantly, the FOMC rhetoric hasn’t changed.

This stability lends a degree of comfort for the markets. It’s possible we can see slight multiple expansion from these levels simply because, while negative, the current information cycle still indicates less ‘unknown,’ and therefore more risk can be priced higher.

Well, that, plus fixed income just has no meat left on the bone. So anyone looking for yield is forced into the deep end of the credit pool, or back into the stock markets. So the TINA market (there is no alternative) remains part of the story.

However you slice and dice it, the markets look to have a good shot at pushing higher over the next few weeks.

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