Courtesy of Scott Martindale, Sabrient Systems and Gradient Analytics
Well, the bulls took that minor pullback last week, and rather than wait for a test of support at the uptrend line, they jumped right in and brought a few more friends along for the ride. Rather than fearing that their run is over, bulls held their ground and found support from bears throwing in the towel (i.e., short-covering) as well as investors sitting on cash who just couldn’t bear (pardon the pun) to watch the train leaving the station without them. Never has the phrase “Don’t fight the Fed” been more predictive, particularly when the Fed is joined by virtually every other central bank in the world.
Look, I can’t deny the dangers pointed out by the doomsayers. I absolutely can appreciate the view that the market (and the economy) has become a house-of-cards. It may well turn out that we have chosen to avoid enduring a little discomfort now in exchange for severe pain in the future. The eventual unwinding of the central bank balance sheets most likely won’t be pretty.
But for now, as long as the world remains awash in fiat currency, U.S. stock market fundamentals on balance look pretty good. I just have not seen any indications that a market crash scenario is imminent. My regular readers know that I have been in the bullish camp for quite awhile, dating back to last fall when the market was trying to break out of a long trading range with resistance around 1220 on the S&P 500. It closed Wednesday at 1391. Sabrient’s SectorCast-ETF rankings of the 10 sector iShares have leaned cautiously bullish for quite several months, and the charts have been decidedly bullish.
I have been saying that a breakout through resistance levels of 13,000 on the Dow, 3,000 on the Nasdaq, and 2011 highs on the S&P 500 would be difficult without elevated volume, and that is what we got. Financial stocks led the way, which is quite important to the sustainability of the rally. Bank of America (BAC), JP Morgan (JPM), Wells Fargo (WFC) and others all broke out of technical patterns on huge volume. Technology, too, has been quite strong, and IYW continues to sit atop the Sabrient rankings, followed by Financial (IYF).
Speaking of Tech, I can’t help but talk about Apple Inc. (AAPL) again this week. The…
