2075 S&P 500 Cleared...2116, And Then 2134 On Deck...Fed Special Meeting Monday

It was a decent week for the bulls as they came close to surrendering key support at 2020, but after testing down to S&P 500 2022, the bulls found their way back in to the game with a nice rally. If they had lost S&P 500 2020 the door was open for a test down to the 1960 area where there's good gap support. Since 2020 had many tests before breaking above, and then many back tests that held, it was imperative that the bulls held that key 2020 level. They did just that. The move up was impressive as the bulls took out strong, moving-average resistance and is now challenging the last high at 2116. If the bulls can clear 2116 with a bit of force it's time for a test of the old high at S&P 500 2134. If the bulls can clear above 2134 with some force then the market is on breakout and there's no telling how high it goes. That said, the breakout would be into massive, negative divergence, and that's when we'll find out exactly what's left of this bull. Whether there's more than we think possible, or whether the end will come very abruptly.

My guess is the bull will end shortly after breaking out, but that remains to be seen. I'm still thinking we get a breakout first, before the market tops out. No guarantee, but the set-up seems to say breakout and failure. Now remember, breaking out and failing is not instantaneous. It takes time and patience. First of all, there's no way to know how far we'll be able to go if we do break out. Maybe it's 21560. Maybe it's 2200. It's totally impossible to know. You wait for the first massive reversal stick for some evidence, but that's a long ways away, so no one needs to worry about that now. The focus is purely on two levels for the bulls. 2116, and then 2134. I think over time they'll both go away. The bears are focused on getting the S&P 500 below 2020, but right now their immediate focus is trying to prevent 2116 from happening so as to not have to deal with preventing 2134. Interesting times. It's not boring.

Ms. Yellen has announced a special meeting scheduled for Monday. There are so many story lines that will come from this announcement that your head will be spinning if you pay attention to it all. There's absolutely no way to know what the discussion will be about, but the best guess would about when to raise rates and how many times they should over the coming year or two. To be aggressive or not. To be totally data dependent or not. To discuss how to deal with China and Europe, since both have just announced totally dovish forecasts with regards to rates.

Both countries are dropping rates, not raising them. They'll post the news from their meeting once it has concluded. It'll be extremely interesting, because many will also wonder if they're going to announce a rate hike as early as Monday. Many will say why else would they meet, that they are letting us all know they're meeting may be their way of readying the market for the event. Who knows! No one knows, but there will be a lot of chatter and rumors over the weekend about what's going to happen. Most of the rumors, as always, will be wrong. Monday will be a very interesting day.

The market was overbought, but pulled back some late in the day. The market is no longer officially overbought, but a little selling first wouldn't be a bad thing at all. It does not have to sell first as markets can defy overbought for a while if it has a destination on its mind that it wants to complete first. Early in the week anything goes, but overall it should hang tough and allow for a test up towards 2116, in the not too distant future. We shall see, but, for now, the trend remains mostly higher, but with those nasty monthly charts looming, I always feel a bit uneasy on the long side. Staying long for as long as the market allows technically.