Building a Top

We are currently in the top building phase.  The last 2 weeks have been your first scare after a 2 month rally.  Usually these pullbacks don't last this long, so it is a worrisome sign.  But at the same time, the damage is being contained to 3% on the SPX.  That is a bit shocking considering how weak the emerging markets and even Europe are trading.  All the risky investment flows have been flowing into US stocks, and that is proving strong support during these "scary" trade war headlines. 

I don't have much too add on the trade war.  It is much ado about nothing.  But that doesn't make me bullish on stocks.  I am bearish on stocks for other more important reasons, which the news driven fund managers are not really thinking much about.  Overvaluation, tighter money, thin but wide bullish sentiment, etc. 

We should have one more rally off this pullback, as the past several trading days have seen traders load up on put protection, so that should keep the market afloat for the next week or two.  After that, I would expect the selling to come back, and with more vigor, with SPX 2600 probably taken out sometime in August or September.