From Slope of Hope:
Don't Expect the Mini-Bubble to Roll Over Just Yet
We have been reviewing different versions of this chart in NFTRH over the last several weeks as the S&P 500 approaches a long-standing target of 1550+. Today it looks like that target will be hit and exceeded with ease, but last summer and right through the Fiscal Cliff nonsense in December, very few were willing to entertain such crazy talk.
Targets are guides and objectives, not stop signs. Although the big resistance that you, I and every other market participant on the planet see is right there and it has its implications. NFTRH had been carrying 3 plans, but is now down to only one.
Plans A and C are now defunct because SPX did not complete a “healthy” primary correction (yellow shaded, chart below) to the low or at least mid-1400′s, at the 200 day moving averages and a ‘higher low’ to the November low. Notice how the correction was minor (green shaded) along the lines of the December correction, which came in response to the Fiscal Cliff hysteria. Well, the Italy Vote/Sequester hysteria barely managed to test the 50 day moving averages.
We have been tracking the series of higher highs and higher lows since last summer, which is why we remained on the bull continuation thesis; because that is what a bull market is, higher highs and higher lows. Period.
Plan B has stepped forward and announced itself after recent corrective activity aborted quickly in another bout of greed and momentum. Here is Plan B as laid out in NFTRH 227 (2.24.13):
Plan B
Some things that bother me from a bear’s perspective are that the limit (per the first chart above) point is obvious, which means that the market may decide to do what is not obvious, and bust to new all-time highs. These highs do not adjust for the inflation that has been baked into the system over the last decade-plus, but the media would love to trumpet ‘S&P 500 Joins Dow, Russell 2000 and Transports in New All-Time High Territory’ none the less.
- SPX uses the current tentative sentiment backdrop (skittish, with more Washington drama on tap) as fuel for a burst upward through the trend line on the weekly chart above [chart omitted for this article].
- SPX is either limited at the triple top line or busts through it. Either way, it is a suck in and the end phase of the cyclical bull. Many bears killed in this battle on the way to ultimate victory.
Another thing going against the bears is that the SPX appears to have higher to go in terms of a stable monetary asset, gold....MORE
