Friday, May 8, 2015

Blowoff Time?

We've been stuck in this range, from SPX 2040 to 2120 for the past 3 months, and it is getting tighter and tighter, towards the top of that range.  It looks like we are poised to make a breakout above 2120.  I don't expect it to be an explosive breakout, because this is an old bull market, and we never got the flush out or V bottom.  I am looking at perhaps a 30 point breakout to 2150.  It shouldn't go beyond that.

Bonds look like they have hit bottom, it seems like all this selling was much in part due to fear of a blowout NFP number.  In any case, a lot of fund managers waited till after the number came out to buy bonds.  The reaction was definitely more bullish than I expected, the number came in right around consensus, but bonds still shot up higher.  We may get a pullback in bonds in the middle of next week ahead of the 10 year and 30 year bond auctions on Wednesday/Thursday.  That could be the time to get in bonds for the eventual move back down to 1.90%, perhaps by the end of the month.

So we are all lined up to get back to our normally scheduled program of stocks higher and bonds higher.  However old and boring it may be.  Those are the fundamentals.

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