Not Acting Like a Bull Market

The 200 day moving average is rising.  The trend is higher.  But this doesn't act like a bull market.  Maybe I am reading too much into the short term trading, but the market made a top on January 26 and its now April 10 and the SPX is still well over 200 points below that top.  A strong market usually doesn't act this way.  Usually a strong market V bottoms and lingers around the highs and grinds higher.  This is lingering around the lows.  A BIG change of character compared to the last 9 years. 

I still can't shake the pundits insistence that the economy is strong and earnings are great, so the market will go back up.  It seems like the crowd has bought into the hype about a strong economy and strong earnings.  If retail is all in, as mentioned in January, where is the marginal buyer going to come from?  It has to be more retail, because the institutions are heavily weighted in equities now. 

If the market made a bottom last week at ES 2560, why is it taking so long to break out of the 2560-2670 range that this market has been stuck in for almost 3 weeks?  Some people will blame the news flow, but that is a poor excuse for this kind of price action.  The market has known about these tariff proposals for several weeks, and Syria will blow over like all past Middle East conflicts.  Don't tell me its Trump and the FBI investigation.  The market would actually welcome Pence with open arms if he became President. 

Short term, I still give the bulls a slight edge here, but one has to question how long a rally will last if we do get above 2700.  It is pretty clear that the market has changed drastically, just looking at the day to day volatility and the reluctance to make V bottoms.  It is a nervous market so it does feel like the market should climb a wall of worry but the price action is so bearish that I am losing conviction on the long side the more it trades sideways in this range. 

Bonds look very bullish here as the curve is flattening, a good sign that 10 year yields will go lower in the future.  A bull flattening is a much more sustainable rally situation than a bull steepening.