Hooray, all the major stock market indexes are up at least 2 percent with the Nasdaq up 2.65 percent as of 2:00 PM Central.

(Click on image to enlarge)

S&P 500 chart courtesy of StockCharts.Com, annotations by Mish.

Another Hopium Rally

The S&P 500 is up 2.38 percent today at the top of a sideway channel that started mid-December. The Nasdaq 100 index is similar.

Nasdaq 100 Daily Chart

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Nasdaq 100 chart courtesy of StockCharts.Com, annotations by Mish.

Both the S&P and Nasdaq are in 3-week consolidation channels, having stabilized for now. 

A look at a longer time frame is more telling.

S&P 500 Monthly Chart

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The dashed lines reflect support levels. The S&P 500 is just above support. There is  at the 3200 level stronger support at the 2400 level. 

There is no fundamental or technical reason to believe current support will hold. Ultimately, I expect a decline to the 2400 level. A decline to the 1800 level is not at all out of the question.

Nasdaq 100 Monthly Chart

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The dashed lines reflect support levels. The Nasdaq is right at support. There is weak support at the 9000 level (not shown) and stronger support at 7000 level.

Beneath that, there is support at 6000 and very strong support at the 4000 level.

There is no fundamental or technical reason to believe current support will hold. Ultimately, I expect a decline to the 6000 level. A decline to the 4000 level is not at all out of the question.

Market Cheers a Poor Jobs Report

The market is up today on another Fed hopium rally. Allegedly, there was another strong jobs report but a dive beneath the surface shows otherwise.

Amusingly, today's rally is smack in the face of a Fed warning about the markets getting the Fed's resolve wrong.

FOMC Minutes Show Concern That Markets Do Not Believe the Fed's Resolve

Please  note FOMC Minutes Show Concern That Markets Do Not Believe the Fed's Resolve

The hopiusts believe the Fed will pivot. It it does, and I think that's likely, it will not be as much as the market expects and it will be because the Fed broke something. 

Neither of those conditions rate to be good for the markets.

But the Fed has trained the markets to act like Pavlov's dogs, so that is exactly what is happening on weak data reports.

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