Ahoy maties! SPX 1130 dead ahead…

Trading computers and the money managers that control them are a predictable lot. You don’t always need to know what is going on in the world in order to forecast their plodding movements.

At the end of the half/quarter/month of June, everyone sold stocks and bought bonds to show how smart they are. Then the month began and they bought with reckless abandon, and in the face of stabilization of the economic numbers. No growth or real shrinkage. Just a boring flatline. Then came a little hiccup at option expiration to bring out the doubters, then BOOM, another blastoff through the 50 and 200 day moving averages. 

All of a sudden, things began to appear rosy again. And if they didn’t, then we could count on Uncle Ben to make it right with the printing presses at the ready. We are now pushing the January highs and still many near-term market participants are looking for an imminent test of the low-end of the trading range. Sorry, not yet.

I’ve been forecasting a test of the yearly highs before the cold weather. I’ve been told I should be run over by a train. How rude! Don’t I know how shitty things are? About how punk the volume is? Yup, I surely do. Yet up we go. But as we get through 1130 and barrel to 1150, we will be turning everyone bullish again. We will also be creating a negative divergence in the near-term.

Look at today. Just 2 days after a blow out up move, the markets continue their levitation act with oil and materials leading the way. What is the stock market saying about the economy? That it is getting ready for the holiday season and an uptick in everything that took the summer off.

I usually advocate not believing most things that the market is “telling you”. But in this case Greenspan got it right; a rising market will fix more than any stimulus plan can. But be careful of that pesky negative divergence that is forming.

If you bought with me in June, Mazel Tov. Take some profits. I will be…