Still Rallying… for Now

In spite of the various structural elements still unresolved in the economy this market continues to climb.

At this point, even the BigFoot Market Macro would flip positive if June ended today.

Both the S&P 500 and the NASDAQ have algo buy signals. The BigFoot database is 70% long right now. Only the DJIA is yet to flip to a buy signals… and momentum is close to triggering that positive as well.

In short, despite the job figures and supply chain stresses of the past several months, the stock markets are caught in a wave of momentum.

Call if FOMO. Call it TINA. Call it irrational. But it is what it is. The trade has been risk on. Money has been moving into beat up names like the airlines (wow) and beat us sectors like consumer discretionaries and risk-on factors like small-caps.

Whether or not it makes economic sense is not the question. This is what momentum and sentiment can do.

Will it last forever? Probably not.

Will it collapse at some point soon? Maybe.

But for now, here’s what is technically unfolding:

The SPX is set to challenge the 3275.87 this week. This was the ‘crest’ of the 50-day moving average in this pattern — the high-water mark of that indicator before the markets collapsed in March.

If we breach that, it’s highly likely we’ll re-test the all-time highs for the SPX.

There is very little down-side momentum right now. Futures are indicating another positive open for the markets. This should set the tone for this week. If there is a pull back (unlikely until later in the week) look for the first level of support around 3130.

The Fed appears to have purchased this market… or at least rented it for a bit. And you know what they say: don’t fight the Fed.

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