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Dow and SP500 Flags Clear to the Upside...Jobs Report The Impetus To The Breakout....

Dow Daily Chart

In the very recent past we experienced a poor durable good report along with a poor Ism manufacturing report and weak GDP. This put a lot of doubt in today's jobs report and probably explains to some degree why the market was meandering the past few days. The meandering did some good in that it allowed the oscillators to unwind quite decently on the daily index charts. Then when we did get the jobs report today it came in hotter than expected by 70k jobs. The market loved it and broke out. Not a rousing breakout but a breakout nonetheless. The market isn't worried about the hot jobs number bringing about rate hikes since it's clear the market knows fed Yellen likely won't be raising rates ahead of the elections in November. She has enough built in excuses to get away with it even though she's badly behind the curve. She's using Brexit fears along with fears from the latest durable goods and Ism manufacturing reports. She's in the safe zone. Can muster up enough smoke screen excuses to keep from raising rates near term.

S&P500 Daily Chart

Today allowed for some good tidings for those frothing bulls and more headaches for those bears who just can't catch a break. They deserve so much better. They have been given the short end of the stick for far too long but when you fight the fed, who has been very transparent about her intentions, you'll suffer the consequences. Those using truth to play have taken a big hit. Never play the truth. Play what's presented and if it goes against reality, so be it. I have no idea how long this nonsense can continue but it's here for now so enjoy it but also keep in the back of you mind that things really are out of control and thus some sense of appropriateness should be applied to your trading ideas. In the end it's about the Sp holding 2100-2134 and hopefully pulling further ahead over time to allow for some breathing room.

Broker/Dealer Index Daily Chart

Today was interesting if you study it carefully. The banks did well because of the belief Yellen will raise rates. She won't but no one cares. Perception is all that matters. It was interesting to watch because the breakout wasn't classic in nature. Normally you break out and you run hard to the up side. We haven't been doing that at all for what is seemingly forever. The market has become a grind, even on breakouts. This is clearly because underneath the surface there is truth biting on the ankles of the stock market. Negative long term divergences, horrible valuation, trailing SP 500 p/e at near 25ish, etc. It almost feels as if the bull market is getting old. We have seen more rate cuts this week as well as more Qe. The Bank of England the culprit this time but it's everywhere around the world. The truth is things are bad economically on a global basis. Low rates and endless Qe holding this market up and you play it that way as long as price dictates you do so. That said, you should recognize what's out there in the real world and apply to your trading meaning be careful and don't get complacent. Above 2100-2134 SP 500 and all is well. Below 2100 and things get nasty and fast.

 


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