Stock Market -- Daily & Weekly

Daily
Back on Feb. 25 and Mar.5 I discussed the decay of key indicators and how evidence was
accumulating that the market was approaching roll-over. I also stressed there could be a
positive whipsaw which would cream the shorts such as happened near the very end of 2012.
Well, we got the whipsaw up on light volume, which equals a clear short squeeze of traders
who, seeing the SPX was approaching prior record levels, figured they could catch a pull back
as the SPX encountered major long term resistance. A breakout last week above the prior
cyclical high of SPX 1531 on expanded volume would have been more comforting for the
bulls, but may still have left the issue of taking out the historic highs unresolved. So we are
left with an overbought market pushing to take out the old highs. SPX Daily

Weekly
The weekly SPX shows the market in a strong but maturing uptrend from the darker days of
autumn, 2011. Once again, the SPX has opened a large premium of 8.6% over its 40 wk m/a
and is overbought on weekly RSI and MACD. SPX Weekly

Note that the 30 yr. T-bond yield is in the top panel of the chart. It has worked well as an
indicator of economic momentum both present and short term future. The labored but still
substantial 75 basis point move up in yield since last summer when the Fed suggested new QE
would be on the way continues to suggest a modest eventual re-acceleration in the pace of
economic recovery, an eventuality to be welcomed, but one which the stock market has already
mostly discounted for now.

The technicals tell me an intermediate term top is out ahead over the next week or two, but one
has to realize that with this large, still open ended QE program in place, players may elect to
chase the market up until the Fed gets concerned that rational exuberance is beginning to turn
giddy. Make no mistake here. There are guys in this market who plan to run with the Fed even if
they get edgy about the place of the market against the economy.