Why Not...Same Old...Sentiment No Longer Relevant...For Now

Overheard in Jack's Trading Room: "I have only been a member for a few months, but have learned so much from you and all the other quality members on this site. The honesty, integrity and leadership you bring to this service is hard to find these days." -- "Cowgirl" - 3/13/15

You ask yourself over and over, does froth matter anymore? It really doesn't. I've discovered, since the Fed is ruling the roost, there is nothing to think about with regards to mania. She's keeping rates at zero and that's all the market seems to care about. There was another report on manufacturing today. It was beyond awful, and that's the perfect medicine for low rates, thus the market loves it. The market will start to struggle more when things come together for this economy, but there are absolutely no signs of it whatsoever. Just when the bears had the bulls buried, the bulls wake up and crush the bears when they least expected it. With froth over 40% on the bull bear-spread it seemed a slam dunk we were well on our way to a strong correction.

Well, at least a decent pullback. Not to be. Froth didn't unwind and neither did those nasty monthly charts. The market gapped up strongly and never looked back. Gap and go. We closed a bit off the highs since we got very overbought on some of the short term oscillators but we still closed nicely above the opening prints and that's what matters most. There's nothing the bears can take away from today that says there's still a lot of hope. Of course, that doesn't mean the bears are dead since we're still dealing with some nasty longer-term charts, but today was a bad day for the bears in their never ending quest to get this market to finally sell with force. The bulls scored a nice technical knockout today. Don't get complacent, but you can't argue with the price action today.

Sentiment has gotten me quite conservative over the past three months, or so, at levels I don't usually get. When I see this type of froth on the bull-bear spread, past bear markets get into my head, and, thus, the lack of aggressive action when we sell. Instead of buying weakness, I have basically stayed away, since it seems to me that we're supposed to have to work off this froth with force at some point. That may be the case, but we're honestly not seeing a single sign that this is about to take place. I need to avoid looking at froth for now, since the market is playing off the forced bull market created by our Fed Governor, Ms Yellen.

She loves the terrible news we saw today on manufacturing. It gives her the excuse to do what she really wants to do for years to come. No matter what she says, folks, about preferring to raise rates because it would mean a good economy, she doesn't mean it. She wants everything to inflate out, and that's why she's not raising rates any time soon. She hopes deep down that the economy continues to struggle just enough to keep rates low, but, at the same time, say things aren't really that bad, even though they clearly are. Bottom line is sentiment has taken the type of back seat I never saw we'd see. The game passed me by on that topic. It blindsided me. It is what it is. I won't be referring to it any longer. Just pure technical analysis and nothing else on froth.

The market is fine until we lose long-term support at key trend line or 2045. We tested down there, and it looked like it would go away, but it just didn't happen. Now we can rise back to the top of the range at S&P 500 2119. There's no guarantee we get there due to nasty long-term, monthly index charts but that's not showing its hand yet. When I look at those monthly charts I have to admit I'm amaze they have yet to kick in to take this market down hard but hey, what do I know. Clearly not much on this. The monthly charts scare me no end but they're being squashed by the actions from the Fed.

You have to keep some action going but I would say at least keep a respect to what's possible if those monthly charts ever decide to kick in. If we take out 2119 on a closing basis then we can run as far as the bulls like. 2045 and 2119 the key levels we're playing between for now. The Nasdaq and small caps in particular are leading thus mania is rocking the way it should. You want the biggest mania areas to lead. They are and all else is following along. Even though today was bullish for sure with the gap up in the pattern, remember that to get super bullish short term, the S&P 500 needs to blow through 2119 with force on a closing basis. Today feels good, and it was for sure, but 2119 or 2045, or bust, for both sides to watch.