Stock Market -- Daily Chart

The cyclical bull market broke out of a consolidation phase this past week as presumptive
new Fed chair Janet Yellen gave a vigorous defense of Fed policy including maintaining
the QE program until the economy firms up and appears self-sustaining. In her confirmation
hearing on Thurs. 11/14, she poured it on with the full knowledge that the production data to be
released on Fri. would be sloppy, and in the current giddy logic of stock players, the weak
data only re-enforced the conviction that QE would stick around for longer to support stocks.
She was outspoken in favor of Fed accommodation for the economy even as The Street paints
the Fed into a corner on QE.

Looking ahead, SPX 1800 and DJIA 16K are within easy reach and traders might enjoy
racking up these milestones. The SPX is not more than mildly overbought viewed in the
short run, but remains strongly overbought with a six month horizon as the average is again
approaching a 10% premium to the 200 day m/a.

The action still seems innocently speculative and not cynically so as was observable as the
late 1990s bubble inflated. I think we all know that sentiment remains very bullish and that
confidence is high. The trade is quite crowded now but the desire to stay long with the
big QE program in force has proven hard to resist.

Here's the daily chart: SPX  The horizontal line at 1700 SPX denotes the top of the long
term price channel dating back to the end of WW 2. So, the market is now getting into
hyper-extended territory for the first time since 2007 and this recent surge above super long
term trend resistance is what is triggering the talk around the web about a new market bubble.

Coincidentally, the 1700 level is now trend support for the current run.