A learned blockhead is a greater blockhead than an ignorant one.
Since the markets bottomed in 2009, one naysayer after another has penned many an obituary for this market. Alas, all those obituaries were based on fantasy and false perceptions; the bull is alive and kicking while many of those experts are either bankrupt or have bankrupted their clients several times over. We repeatedly stated over the years that the era of low interest fostered an environment that favoured speculation over hard work. This is why so may companies have opted to be boosts EPS via share buyback programs. Why work, when through the magic of accounting you can create the impression of growth when there is none. All is well, and when it ends, only the workers and the masses will lose for the corporate wenches will walk away with bloated accounts.
Despite the latest rate hike and the insane ramblings from the Fed that they are ready to raise rates more aggressively; yes we heard this last time and for over one year nothing happened. The reality is the economy is sick and only appears to be thriving because of the hot money that is being funnelled into the markets. This helps foster the illusion all is well when in reality everything is falling apart. Hence, while the Fed talks big, its bite will be weak. We could go on providing more reasons as to why the economy is weak such as the fake unemployment data the BLS tries to get the masses to swallow, but all of this is irrelevant. The trend of hot money is in play, and until the supply of hot money is cut, this bull market will continue to trend higher. This market will not trend higher forever; it will eventually run into a solid brick wall. There is no point of fixating on what will happen one day when its far more profitable to focus on the now.
The three charts below illustrate why this bull market still has legs
The semiconductor sector needs to be in a strong uptrend for a market to rally on a prolonged basis. A quick look at the above chart (semiconductor index) shows that the index is an in a very strong uptrend. It is trading above its main uptrend line and has continued to trade to new highs over the past five years. It could drop all the way to 650, and the outlook would remain bullish.
IYT (an ETF that mimics the Transports), is trending upwards again after experiencing a nice cleansing correction. A monthly close above 165 will pave the way for a test of the 195-205 ranges.
Finally, as we stated in the alternative Dow theory, the Utilities appear to be getting ready to trend higher.