But I'd like to point out that ignoring the news (noise) worked again. Wherever you turned last week, there were smart, highly- (over?) paid economists and analysts calling for $5B-$15B of tapering. I think they all went to the same school because the numbers were all very close - at least the ones that I heard by accident.
How did that work out for them? Did they save their clients money by advising them to be "careful" or "cautious"? Did they get a bigger bonus? Did they still collect $250K+ for touting their [very wrong] opinions? Were they at all remotely helpful in making an investment thesis and executing a plan? How about those kind fellows that said to buy gold and emerging markets at the top based on continued Fed injections? Was that helpful?
No, no, no.
If one looked at the $SPX chart, put some ear plugs in, went long on a daily close above 1690 (as I suggested in the last blog post), took profits when available, raised stops to the lows of the previous day, exited remaining shares on stop out, etc. - you would have had a great week.
So what's in store for this week? As usual, it's helpful to look at the charts.
Last week, we had a long-wicked bearish candle that stuck it's head [briefly] above the box and then retreated to close just above the box (by a few pennies). Most other indicators are still bullish.
There's 3 scenarios to keep in mind here:
1) We rip higher and close above the box with a strong green bar which would suggest a further box-length move in the direction of the break (up).
2) We rip lower and close below last weeks bearish candle which would suggest we attack the lower edge of the box (August lows).
3) We drift sideways and frustrate both bulls and bears.
My 2 cents is that we drift sideways (#3). After a strong push with FORCE last Wed, it would be unusual to see us just give up and tank. More often, we see a pause, retest that bar, and then roll if that's the direction the market ultimately takes. Additionally, most weekly indicators are still bullish and we usually take a couple weeks of neutral bars before we start to roll (see May and June peaks).
Here's the chart:
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