Inflection

After about a month of melt-down this market has spent almost the next month melting up. This week that upward momentum may finally get challenged as the S&P500 is at a significant resistance level. A number of technical resistance indicators are coalescing around the 2900 level.

Of course, to seek order in this market is to court insanity. There is a lot of guessing still going on. Do you fight the fed? How bad is the economy going to get? How out-of-whack are PE ratios? How much more will oil fall?

The truth is, we’re caught somewhere between Federal Reserve helicopter money and a depression-inducing deflation cycle. The Covid debate is becoming the side show as the stock market continues to yo-yo.

Did we already put in a bottom? Is this a v-shaped recovery? Don’t fight the Fed? The stock market is not the economy? Stocks are a leading indicator?

Or is this just a bear-market bull run? Stimulus-filled hope? The bright flash of an economic supernova before we collapse into an economic black hole?

I don’t know the answer. But I can tell you futures were steadily down all Sunday evening, without much whip-saw… Just a slow and steady decline.

For this week, if the trend is negative, markets want to test SPX 2675.

The reality is the numbers easily justify a decline back toward the 2350 level. But this market isn’t exactly playing by valuation right now. We’re dealing with momentum and projections now. Those are tricky masters.

If there’s a small silver lining (which really, this is a rounding error, so not really), the BigFoot database went from only 18% long to 20% long. None of the macros changed from their previous dispositions either. Credit and Market indicators remain in the negative. The Economic macro, while fading, is still in the green.

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