By Dominic Picarda.
Unsurprisingly, America’s politicians have settled their differences over the debt ceiling and government shutdown. The alternatives would have been entirely self-defeating. The US enjoys an “exorbitant privilege” as the issuer of the world’s reserve currency and was never likely to undermine its standing by needlessly if only temporarily defaulting on its debt. Stocks have rallied once more in response, just as I have been calling for them to do. The bears have been left once more nursing sore backsides. And I believe the pain could worsen for them in the near term.
I am largely baffled by the negative arguments I am hearing right now. I dismiss the idea that weak breadth is an issue for Wall Street in this week’s main column. While the fairly feeble number of stocks making new annual highs has been a feature of big tops like 2000, 2007 and 2011, more often than not it has been irrelevant. I do not accept that “all the good news is in the price” now either. Quite how one measures this, I do not know. But with QE still going, I want to be long of the indices.
Following the spike higher yesterday, the S%P has gone gently sideways, which is symptomatic of a market that’s readying itself to go up more still. We are already within easy grasp of the all-time highs at 1729.86. My sights are set on a fresh peak at 1755.7.
Support: 1695.6 – Resistance: 1782.1
Support: 1687.2 – Resistance: 1767.1
Support: 1669.8 – Resistance: 1740.7
Support: 1661.2 – Resistance: 1723.7
DAY: Stay long or buy bounces back through the 21-hourly EMA
POSITION: I’d buy a further bounce from the 13-fourhourly EMA in due course