Bulls are getting Tired already

Short-Term:

Last week we basically went no where due to a small pullback after the FOMC. This week will likely be very similar. We are looking for a small bounce early in the week that should take us back near the all time high. However, these mundane periods over the last few years have lead to a decent pullback. So we may see one over the next few weeks.

Statistics for 2 up week on the S&P: 57% 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 low formed yet another supposedly “rare” V bottom. The market has been sucking in short with these quick drop only to quickly squeeze them, forcing the market even higher. We have come to believe this invisible hand under the market is stemming from ETFs with their constant inflows of passive money.

We are currently in an exhaustion phase of a Bull move. While this phase could continue for some time, chances are the upside is limited to around the 250-255 level in the medium term. We have seen yet another Bear Flag Breakout. The pullbacks, however, in the flags keep getting more aggressive. So Bears are slowly getting stronger.

Also of note, SPY has now been above its moving average (the blue line) for 44 periods. This is extremely unusual and we normally leads to a fall below this average in the near future. This is now the longest period above the average since 2003 (about 50 periods), so we are very rare territory.

Long-Term:

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

The Calendar:

This week: we have another good amount of economic information

Next Week: We have the Employment report as well as Yellen speaking.

Trend Following Models:

Our long-term models are Bullish.
Our medium-term models are Bullish but weakening.
Our short-term models are Bullish.

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