Sometimes sentiment does not seem to matter, at least until it does, and now seems to be one of those times. On Thurs @mrktsignals, I indicated that the rally was expected to continue into next week with the next target SPX 2320 and 2319 was hit Friday. Since I see no sign of an imminent intermediate decline, I can only point to the SPX rising wedge in the SPX since early 2016 with a top at 2050 and a low at 1810. In EW terms wave 1 was 300 SPX pts and with the current wave 5 starting at the pre-election low of SPX 2084, then a top may be 2390 meeting the rising channel around April.
The overall Indicator Scoreboard remains near an intermediate term SELL level which tells me that the top will be followed by a significant decline.
The Short Term Indicator (VXX $ volume and Smart Beta P/C) remains at a very low level, but as yet has not seen the spike low to the SELL level that was seen preceding recent significant declines.
There was not a lot of change to either the VIX P/C or TRIN charts that were shown for the past couple of weeks. SPX and NDX ETF bearish sentiment remains at lows of the past two years.
Bearish sentiment rose slightly last week for bonds (TNX) as interest rates rose slightly.
Finally, for gold stocks (HUI), the prices have now exceeded the Jan 2015 highs, but sentiment has moved firmly into the sell level. I have noticed that almost on a daily level that gold prices have been moving inversely to interest rates and will probably remain the driver of any short term price movement.
Conclusion. The big news story is Trump's announcement of a significant tax plan over the next one to two weeks. This is likely to be a "sell the news event" for a short term pullback. We could see SPX 2330-50 when announced. Can the significance of Trump and Putin both being billionaires be more than a coincidence? Several years ago Russia started a 15% flat tax rate, but it did little to stimulate markets or the economy.
Weekly Trade Alert. No specific shorting targets, last weeks update on Twitter cancelled previous trade guideline. Updates @mrktsignals.