Emerging crosscurrents have generated both zeal for opportunities (perhaps ridiculous enthusiasm for IPO's) plus underappreciated risks (Brexit foremost or should be ); not to mention a pending China deal.

Is there a narrow window for the EU and UK to mitigate differences in a way that gets a favorable response in Parliament? Hence risk for the 'hard Brexit' actually rises in April; and now there are public petitions, both to demand a new vote, as well as demand a full 'break' with the EU, which is what the original vote was about (not making a 'deal').  

On the back of this; we've had the best Quarter overall for the S&P in a decade basically; and we're proud to have identified both the purge in the Fall; the 'V bottom' in the targeted 2300-2400 range; and lots of churning around S&P 2800, which remains sort of a 'Maginot Line' for technicians now (as we lift -no pun on the IPO- into the mid-2800's). (I think it's nonsense to suggest LYFT lifted the market; actually it moved up despite funds channeled into that stock which closed near its low for the first day of trading.) A question may be if S&P fades Monday.

So far the 2800 range has held against all challenges; economic, Fed, and even political barrages. Some of this is on hold pending China (or failure which would tank stocks beyond just a shakeout), while mostly a general perception is out there; that risks are greater than prospects for now. And of course the idea of 'selling the news' on a China Deal. I realize many analysts, technicians and pundits continue bearish or for that matter think IPO's will be the saving grace suddenly. Try Fed and ECB policy and avoidance of trade war with Germany for better keys. I also forewarn buybacks are diminished ahead of Q1 earnings reports. 

While I concur with ideas of 'sell the news' on a China deal generally; I have also noted prospects vary for all this; depending where S&P 'is at' when / if a China Deal surfaces. (If the S&P has retreated, then the odds for S&P reviving advance are increased.) I also note something else: outside of the momentum/FANG/big-caps; a lot (if not most) of the holding action of these last few weeks masked the slightly rotating correction that eliminated excess for the broader list. It is a condition that both creates a bipolar kind of market; with valuation not excessive for many stocks, and remaining high for the big-cap leadership.

Therein lies a problem: the leadership is not cheap and buybacks now diminish as we approach a 'quiet period' into earnings season for Q1. If indeed (and often that's been the case) 'buybacks' helped levitate a lot of stocks that might otherwise be 'heavier' (Apple, Facebook, even Boeing come to mind); well, then the absence of that might allow more choppy trade, even if today's 'mass mindset' is for markets to stay up. 

In sum: there is a 'tone' out there to not let the markets find their own levels independently. And it's not only 'buybacks', but pressure on the Fed to remain dovish (if you heard Kudlow Friday, you certainly detect overtones of pressures). Certainly there's low-rate conditions globally for now; but as you hear splintering of views by Fedheads, which get referenced, markets react momentarily, and then stability returns.  

So there is minor rotation; too much hype about IPO's, and no, capital is not being radically drained (at least not yet) by these offerings. That is a ruse to a degree, perhaps by those who would rather not focus on the degree to which buybacks have again artificially maintained S&P.  

Nevertheless, having forecast last year's 'rotating bear market' series of 'rinse & repeat' moves highlighting distribution; and the Fall dive into a 'liquidation wave' that set-the-stage (from the targeted 2300-2400 or so S&P zone) for a rally that turned-into one of history's best Quarters, we're honored. So now the question is how much 'give-back' might be pending; although ideally it stays within a 'pause to refresh' modality.  

This super S&P occurred largely thanks to a Fed following-up the Dec. turnaround with 'patience', along with the ECB's 'calmer' approach (of course the two terms were honed-in-on at the time). We're honored to have nailed both the preceding phases (even 2016-'17 'to the Moon if Trump wins' run-up), and having called this Quarter, totally avoiding shorting or the fading, that has been so popular among technicians.

This matters, because part of why this holds-up is under-performance by a slew of funds and managers, who either waxed-negative or really are just waiting for a pullback worthy enough to justify entering. I'm not criticizing their logic based on valuation (which for the leadership is not bargain days, but more of a daze), but just observing this behavior.  

Bottom line: After a strong Quarter (best start to a year in a decade), the question remains how much higher they can 'milk' this market as a time of 'quiet' squelches buybacks for awhile; Brexit looms; and some Fed officials talk about hikes while others imagine cuts from what sure are low levels already.

The markets cannot sustain a combination of Brexit or combinations of tariffs which might include German automobiles. The FX relationships are showing their importance, with currency market swings. Trade (of course include China) areas likely for now matter far more than hype about IPO's like LYFT (which is largely irrelevant for the market, and even for potential shareholders, who generally are well-advised just to watch and look down-the-road after lockup expires).  

The various asset classes are showing mixed performance; while Oil, incidentally, has moved up generally during the Quarter and was more of a key than its given credit for. And credit (low rate) markets alone is a serious contributor to not having an exodus from equities.  

Finally the political realm. We know what is being proclaimed; while at this point one continues presuming the White House wants strength in the markets to prevail all the way into 2020 Elections. Probably the reality of disappointing earnings; of Brexit unknowns; and buybacks in suspense for awhile pending those reports; of China trade deals being 'initially' sold-into.. and if that occurs 'when' the S&P is overbought to a greater degree ... well. It's a set-up for correction not catastrophe; and it may well remain 'within context' of the overall upward trend. However we do not embrace the macro bearish concerns (we see them and at times focused on them; and eventually they do loom out there).  

Conclusion: our forecast over a year ago (a late January 2018 spike up called a blow-off) was 'synchronized global contraction', which is generally heard only now from analysts. That means 'synchronized global expansion' ended ... rotationally ... back in late 2017. Nuances of retrenchment were visible starting just about a year ago I opined. It also suggests we might (if all goes well with 'trade') be nearer the end of a recession-like contraction few acknowledge being a year or more old at this point. Hence it's not a trough yet; but that will be pending. 

That (ideally) would put December's capitulation washout (time to buy not sell we argued) as the beginning of the first leg up; and suggest a correction (perhaps) in later April or May (timing is news dependent to a great degree) would be the entry point managers are awaiting for. At the same time that would not deny ebb-and-flow movements during a Summer and Fall, which will be trickier to navigate than usual; and for which the focus will likely shift more toward domestic politics (so far all of that has really not ruffled the markets).  

For now into strength we'll see if the big (FANG types and momentum favorites) stock buyers are 'April Fools' for the nearer term.