SPX Rocketship

It looks like the SPX has reached an intermediate term ceiling at 4400.  The uptrend has been so steady, with only very brief corrections, but with 10 year yields down below 1.30%, the stock market propellant that is lower and lower yields is running out of fuel.  I am now expecting a range trade for the next 3-4 weeks, trading mostly between 4300-4400.  Post opex July until opex August is usually a seasonally weak time of the year, as Europe goes on vacation and lack of new buyers willing to take the market higher after such an extended run.  It is possible there will be occasional forays into the 4250-4260 zone, but those should not last for long, as that is rock solid support.  

The next few weeks could be the last decent opportunity to grab a seat on the $SPX rocketship below 4300, with a likely destination of 4700-4800 by year end.  

The sudden worries about the Delta variant, declining 10 year yields interpreted as economic weakness, and bad stock market breadth are the most common excuses I see for the selling.  Those seem like non issues considering how dovish Powell has been and the already overflowing liquidity as shown by the massive reverse repo cash balances parked at the Fed.  

The only way you can get sustained selling is if you get a very sharp hawkish turn from Powell in the next 2 months, which is about as likely as Trump saying that the 2020 election result was fair.  

I am hearing many "experts" opine about how market is overbought with a bad mix of high inflation, peak growth rate, bad market breadth, Delta variants, etc.  The pessimism, which never really went away earlier this year, has come back more broadly in the past week.  Put/call ratios are rising, hearing a lot of bearish market calls for the next 3 months going into a potential taper announcement. 

I don't expect this bearish psychology to really fade away until the fall, when you will have had enough time to consolidate the gains from the last several months, forming a base to propel into a parabolic FOMO chase for performance I expect in the fourth quarter.  Until then here is a simple game plan:

There is always a potential for an overshoot to the downside, but with the worry this thick, I would be surprised if it went below 4200 on any overshoots.  Maybe finally we'll have a range trade this year, favoring traders, instead of the steady upward grind higher that has been a gift for buy and hold investors.  

In strong uptrends like this, in a bubble environment, range trade doesn't last for too long, so I will probably just buy and hold as we get closer to the end of August.