Good morning. S&P500 futures are off to another negative start. The price action has taken a decidedly different tone than what we have been accustomed to in 2019.
We've had some rally off the Christmas Eve 2018 lows.
I see some of the same bears who said to sell the Market in November 2016 (and many other times for that matter) calling the recent rally a bull trap. Perhaps this time they will be right. However, like every other time, I doubt it. I think yesterdays price action and this mornings speaks more about a market taking a break than setting up for that long awaited market crash, and/or end of the bull market.
My thoughts are the $SPY will be up near that $280 level, that it began its December descent from, within the next few weeks. The price action from this earnings season is encouraging. The FED also is in no hurry to hike rates. Cheap money will be around for a lot longer, and that means risk assets remain the place to be. Pull backs are healthy. Being excessively bearish since the lows in 2009, while it qualifies you for numerous marketwatch cameos... hasn't been healthy for your investment portfolio.
I pointed to this long term momentum trigger after the lows last month. I think its important to note what happened in 2016 after that was triggered.
FWIW at the time in 2016 the market was near its lows and bearishness was high. We saw a similar reaction last month. And yet a strong rally off those Christmas eve lows as well as a surprisingly positive reaction to earnings has done little to quell the bearishness.
The VIX continues to melt back toward that sub 15 level. This, despite all the excuses to sell this market. And there has been plenty of reasons to sell.
So where do I think the market is headed? I think in 2019 we will, yet again, hit another new all time high. That certainly is not the consensus. You could argue those uber bears are even more bearish than ever. With the recent market turmoil and negative headlines around the globe they can smell the blood. The Central Banks are not going to let this market fall without a fight. It took a few months of downside to get the FED to take a step back. Yellen mused that we may be closer to a rate cut than a rate hike.
I think $SPY $280 is coming over the next few weeks. Long term support rests around $262. We can't rule out a test of $262 first, which of course would get the bears pounding their chests louder than ever. Either way I believe $280 is coming...
... and it will be the bears who once again get trapped not the bulls. Is it not ironic that the bears are calling this a bull trap, when it is in fact the bears who have far more experience getting trapped than the bulls? Which of course gives me that much more confidence that upside awaits.