FOMC

Short-Term:

Last week, we saw the Bulls act quickly and Gap up to a new high. Bulls are now firmly in control and will look to push past 250 aggressively. They will have to hope for nothing new out of the FOMC that derails there momentum.

 

Statistics for 1 up week on the S&P: 50% 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 43 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 will make up for the last few week with the FOMC. Currently there is a 99% chance that rates will remain unchanged but the focus will be on the balance sheet timeline.

Next week: We will see a good amount of economic data.

 

Trend Following Models:

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

 

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