Fake Out?

Short-Term:

Last week we were able to breakout to new highs. This was a slight surprise, but in a trend the surprise is always with the trend. The Bears however, still have some hope. The rally has not been very broad based and there is a decent amount of weakness across the market. This makes the breakout a bit suspect. We need to keep an eye on the possibility of a fake breakout here.

Statistics for 1 up week on the S&P: 49% chance to close green the following week with a profit factor below 1. Not good for Bulls.

Medium-Term:

We saw a large move down on May 17th which was quickly bought. This move could have been a warning shot (which creates a sort of fog of war). If Bulls can not quickly make another strong breakout, Bears will look to take back control. Overall, we are still looking for a high to low 5% pullback. If we do see this pullback, it will likely test the 2017 open around 224-227. The Pullback however, will almost certainly be bought and the market will attempt to at least retest the highs later in 2017. At that time we will see the next real chance to see a strong Bear trend emerge.

If we do see a strong Bull breakout here, we could make a run at 2500. Which would be the target from the current range as well as a nice round number. Such a run however, would increase the chance of an abrupt pullback with little or no warning.

As far as Historical periods go: we are now entering the weakest part of the year for the equities market. “Sell in May and go away”.

 

Also of note, SPY has been above its moving average (the blue line) for 27 periods. This is extremely unusual and we normally leads to a fall below this average in the next 2-4 bars or so. This is now the longest period above the average since 2003 (about 50 periods), so we are in very rare territory.

Long-Term:

Long-Term Market Outlook (Updated 4/16/17).

The 2400 target was fulfilled. This was a great area to take some profits off the table, and we should normally see a pullback here. (3/5/17)

The Calendar:

This week we will see the employment report on Friday.

Next week pretty slow as we gear up for the Fed.

 

Trend Following Models:

Our long-term models are Bullish.
Our medium-term models are Neutral.
Our short-term models are Neutral.

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