Mixed Bag Today
Good news for the exhaustion/reversal case: S&P 500 made a high today that will most likely trigger another monthly DeMark exhaustion signal for the S&P 500; we would need to finish the month above 1,277, which was the November 2011 high. Monthly signals have a good track record; something we will respect.
Bad news for the exhaustion/reversal case: Three “stop-loss” or DeMark risk levels were violated in recent days: (a) 1,324 on a weekly chart, (b) 1,312 on a daily, and (c) 1,325 on a daily. As we noted last night, if the signals are “wrong”, they tend to be “really wrong”, meaning stocks could march higher in a rapid manner. Another close above 1,324/1,325 may prompt us to consider making some changes. We will prepare for more upside as well as more downside.
The Fed opened the door to more “easing” and “accommodative policy” through late 2014, which means they will continue to flood the financial system with printed money and they will continue to grow their balance sheet; both of which tend to be friendly for asset prices.
