The S&P500 broke above its 100dma this week- a positive sign for a market recovery. HOWEVER, I remain cautious and patiently await the next shoe to drop. (For more information on the importance of the 100dma see: Early Warning Chart )
This week’s stellar performance was accentuated by assurance of more easy money from China and the European Union, as well as better than expected earnings from Google, Microsoft and Amazon. [Cloud Computing is ascending, while the main street economy declines- as noted by poor performance from Target, Chipotle and Skechers.]
Technical charts look promising, but corporate earning fundamentals continue to decline. The profit headwinds of a strong US Dollar and week global demand persist. Faith in Central Bank intervention may be waning, and is overshadowed by the uncertainty of credit defaults in the Energy and Commodity sectors.
Just as the recent recovery in Oil has failed, I expect the general market rally to fade.
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