Last week's trade alert stated a shorting target from a high of SPX 2070/80, but I was expecting it at the end of the week not on Mon so I missed that one. My expectation was the opposite of what happened, but I got the whipsaw right. What we saw were declines every day after Mon that looked like the bottom was going to drop out, only to see miraculous recoveries by the end of day. What actually happened is more likely accumulation pointing to higher prices ahead, while I was expecting distribution pointing to a top.
We have three big events over the next month that will determine were the stock market goes. The first week of June is the job report and should be weak given the rising initial claims (see the 1-yr trend at research.stlouisfed.org/fred2/series/IC4WSA). A weak jobs report raises questions about a Fed rate hike so expect a positive response (my target is SPX 2085). Next on June 15th the Fed announcement where a "No" vote will likely see the SPX up to 2100. Finally, the Brexit vote on June 23rd where a "No" vote will likely see the SPX up to the previous ATH at 2135. Different outcomes will likely not be positive.
Sentiment is virtually unchanged for the week both intermediate (2 to 6 months) and short term (2 to 6 weeks).
A spike in bearishness in the middle of the week faded by the end of the week.
Conclusion. The likely accumulation phase has forced me to raise my outlook for making it to the ATH of SPX 2135 from 40% after exceeding 2085 (from April 9) to 50% dependent on the events listed above. If ATHs are achieved, election jitters will take front stage and could bring about the "summer swoon" mentioned March 5.
Weekly trade alert. A new very short indicator I am investigating to help during periods like last week indicates a short-term pullback is likely (possible gap fill at SPX 2040) before a rally, likely to SPX 2085 the first week of June. Look for a pullback in SPX to go long at 2040 with a stop at 2030 and a target of 2085. Updates @mrktsignals.