S&P Superman

It is like it has always been.  Europe lagging.  Same with emerging markets.  And U.S. leading.  AGAIN.  A 5% drop in the Eurostoxx index couldn't even keep the U.S. market down more than 1%.  At that rate, in order to enter a bear market of a 20% fall in U.S. equities, Eurostoxx would have to drop to zero. 

It is uncanny how strong this S&P is, it's made of Teflon impervious to major weakness even in one of its biggest component, AAPL.  A whole continent dropping 5% at the drop of a dime barely makes this S&P flinch.  There really must have been huge pent up demand after the fiscal cliff to enter equities.  And there isn't enough supply out there, with big companies going private (Dell), fund outflows turning into inflows, weak data which keeps Fed at $85B/month bond buys till infinity, and corporations still levering up to buy their own stock, because they think low interest rate money is a great way to pad their stock prices. 

Europe has the ECB, which is a liquidity scarecrow compared to the money orgy going on at the Fed.  The clowns at the Fed probably think they need to pump even more money in there because long term bond rates aren't low enough for them!  All this during a backdrop of flattening earnings and higher taxes.  Fundamentally we shouldn't be going up, but supply and demand trumps all, just like it did in the late 90s and in 2006-2007.

Yes, we are seeing more volatility while going sideways and that usually means that a trend is changing but with Europe already down so much, I don't see how Europe can take the U.S. down.  Unless Europe goes into the toilet again and panics, I don't see ES below 1490.  And with Draghi, financial panic has been eliminated in Europe.  Expect a steady grind higher for the next 2 weeks.  We still got a ways to go before a top is made.