E Market Briefing For Thursday, Feb. 7

'Priced for Perfection' is a common refrain for the market's status now, in the wake of our projected run-up from the indicated December V-bottom. In my view that low turned into 'more' than a rebound to resistance/congestion, largely because of the 'calmer' central bank policies, really a global scenario that is primarily the catalyst behind the S&P 'nudging' above our upside goal just as suspected likely. So now what?  

  

We already indicated that once we pushed-up into early February, risks of a short-term top would increase. Seriously; what's really happening is not a reaction to the President's State of the Union (which generally was the best speech he's given, even if he didn't pause or segue between topics).

What the current 'seemingly jittery' S&P condition is, boils down to factoring in a deal (of some sort) with China; realization it's not bargain day; plus with so many (normally) Bulls missing our projected selling outlined last year, as well as the low in December; well they are sort of 'Bull/Bears', because that is not a strange animal, but rather hoping the market sells-off to let them in.  

So let's summarize where this leaves us for now:  

  • When too many 'normally optimistic' technicians and analysts suffer with angina and keep talking-down the market; it often works higher, since it is uncommon for the market to announce a forthcoming decline;
  • As I've noted during January; the market can stay 'daily basis overbought' long than those Bull/Bear types can stay short;
  • We have advised against shorting or liquidating; with expectations that risk of a pullback would increase for February;
  • Importantly, we believed (still do) that such a pullback will be within context of an overall uptrend dating from our December lows;
  • This fairly optimistic assessment could change given many variables we all know of; but particularly if the China talks were to go awry; or we get more impact from Brexit than anyone wants to discuss;
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