Beach Ball

The bears have tried to keep this thing underwater, and it is just so hard to do it.  The buyers just lift the offers effortlessly.  The down moves come grudgingly, with high put/call ratios and the crowd getting bearish on any pullback days.  It is a horrible market for those who thrive off of volatility.

The ultimate top is still ahead of us.  With tax cut goodies coming down the pipe, in some way, shape, or form, the market can smell it, even if the media tries to take bulls off the scent trail.  Trump will get his tax cuts, come hell or high water.  Unlike health care, which he could care less about, he wants those tax cuts for the rich.  He wants to eliminate the estate taxes.  And the Republicans never met a tax cut they didn't like.  Revenue neutral is not going to happen.  The deficit will be blown out big time, and that is exactly what Trump wants.  A deficit financed stock boom.

The market is not worried at all about those French elections.  It is surprising, considering the results of Brexit and the US elections last year.  Anyway, it is looking more like a long chop period, like 2015 before you get a change in trend.  This could take 2-3 months of chop before we drop.

You have to be careful with SPX shorts in this market, despite the small cap weakness, the SPX has hung above support levels around 2350.  I wouldn't want to get short until everything lined up:  complacency, low put/call, overbullishness, and technically extended.  We have some complacency, but I don't see any of other 3 things.

Bonds are making higher highs and higher lows as we get closer to that important 2.30% 10 year level.  Many people are eyeing that level for a change in trend.  If we break through, you will see a lot of stop loss orders flood in and that could take us quickly to 2.20-2.22%.  I remain bullish, but with an eye on the exit on the next multi-day thrust higher.