Thought I better reply here,
@Goldbullsach, wouldn't want to anger the powers that be.
Trying to figure that stuff out right now. I agree with your cautious posture. I am sort of in limbo myself. To my mind there isn’t much trade at this point with the SPX having gained so much in such a short time. Even though the melt-up could well continue, I would not chase this rally and am prepared just to watch it. Mind you, we got used to radical V formations over the past year but there is something telling me that there is not that magnetic pull right now. Of course a slow melt could always be in the works - as soon as we think we have the key they change the locks. The intermediate term macro issues include the increasing perception of the problems associated with the recent expansion of our deficit combined with hotter growth projections. It’s not as much about the actual deficit as it is the rate of expansion vis-à-vis hotter growth.
The near term outlook is also based on the velocity of the snapback from SPX 2533 area of 9 Feb. It now seems a bit too extended based on short term momentum indicators. Also, that daily candle for Friday’s close does not look too healthy. I would like to see how it handles a test of the 50% retrace of those levels – about 2703. We closed at 2732.22 for the week. If the SPX can close above the 61.8% retrace level at 2744, it might give the bulls more confidence to run to the next retrace level –without me. Of course this is all textbook stuff and I suppose the money will be found in the nuances. I think you were asking about a longer term view, but the tradeable event of the week for me is going to be the release of FOMC minutes – from January - on Wednesday. Normally we do not get much action from Fed minutes, but many are waiting to see if the minutes reinforce the news that was the trigger/excuse - along with our last employment report with “strong” wage growth - for the recent declines. As for our small caps, the Russell also has a nasty looking daily candle and could not close above the 50 day sma but is positioned above the 50% retracement of the recent lows and did manage to get above the 61.8% intraday on Friday. If it closes above it soon, this could spur interest in everything. I will have to figure this out by Tuesday, got too into politics this weekend!
I will have to take a look at your small caps and do some comparisons. I do keep abreast of your macro and have been impressed with recent cautious comments from the RBA about US debt and spending.
(20min delay)