21st March - The S&P remains powerfully bullish
24 March 2014
TECHNICALS:
Weekly chart
The medium-term chart tells the story of a continuing bull trend, whose pull-back s have never seriously threatened the supports.
Daily Cable chart
The short-term price action show one of the few tests of support.
Note well the exuberant bounce.
The market is poised to break into new territory.
FUNDAMENTALS:
The S&P 500, in only one short week, has re-established its bull credentials. After a winter characterised by extreme winter weather which for months affected almost the entire US and caused a noticeable slowing of economic activity, the S&P is closing in on new highs.
Recent economic data has begun to confirm what most analysts, including the Fed, have long thought: the slowdown was indeed weather induced.
The most recent non-farm payroll report has shown a pick up in job creation and beat market consensus and new jobless claims remain on a downward trend.
The most recent ISM surveys were broadly economy bullish and retail sales out last week came in stronger than expected. Moreover industrial production released on Monday this week, reported a 0.6% increase, again stronger than expected.
The Fed at this week’s FOMC meeting decided to continue their taper policy and shaved another tranche from their monthly bond purchases, as they judged the economy strong enough to live with a further reduction of new stimulus.
But the Fed appeared to go further. In her post-meeting press conference, new Fed Chairman Janet Yellen indicated that interest rates could begin rising earlier, perhaps no more than six months after the Fed has fully wound down its QE3 program. That’s some time in Q2 2015, much earlier than previously indicated by the Fed.
The good news is though, this market has largely shrugged it off.
What makes the current price action look even more exciting is the market’s performance given the geopolitical back drop. Less than one week after Crimea voted to join Russia in what the west judges an illegal referendum, with the Russian authorities hurriedly obliging with annexation, the market seems completely unperturbed.
There are several reasons:
In short, traders have taken the view that there is little the west can do to persuade Russia to return Crimea to Ukraine. Russia will be pleased to have secured the territory that is home to its black sea fleet and will judge the costs of such action are manageable; ergo for western, mainly US, financial markets it’s business as usual as traders watch the economic data and the Fed.
With Spring almost sprung, economic activity should pick up further and with it the fortunes of this market. Moreover as a shocked Europe looks for alternative supplies to Russian gas, the US looks well placed to offer an alternative.
The result will be Europe less dependant on Russia and the US improving her trade deficit as the shale gas boom propels the US to the position of number one global energy producer with all the economic benefits that confers both for main street and Wall street.
In summary this is a bull market.
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28th Mar - GBP/USD Bulls Hit Temporary Barrier 
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21st Mar - Brent Crude Slips to Pivotal Support