I've been saying that it is probably not wise to fight this market and last week's action lent credence to my suspicions. The C and S funds both posted weekly gains, while the I fund back up a bit. It has appeared that the powers that be want this market elevated. Driving that perception is the current tax cut narrative, which if successful, could see this market launch much higher than current levels. But if that narrative falls apart, things could go the other way. It is my expectation that there will be at least some degree of success in transforming the current tax structure and tax cuts will be perceived as a solid foundation to corporate profitability, while driving (improving) the job market along with it.
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That gap higher on Friday sure does look bullish. There is no overhead resistance and we are approaching the more seasonally positive 6 month cycle.
NAAIM is neutral with no short bears. The options are neutral for Monday. TSP Talk is neutral. Overall, sentiment looks supportive for the bulls. Breadth remains bullish along with liquidity. I am leaning bullish for next week.
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