Welcome To The Melt-Up

I was asked for my thoughts on today’s latest “market” surge higher. My response was: Think Guns & Roses “Welcome to the jungle” opening line. And instead of “jungle,” insert melt-up – and there you have it. Because what we are now witnessing is the “we’ve got fun & games” aspect of it. Here’s why:

The Fed decision was Wednesday and the demanded (dare you refuse) rate cut was delivered. Next: you had end of month positioning yesterday and a new month positioning today, all coinciding with a jobs report that was, for all intents and purposes, “spectacular” if you’re a Bull. Why?

Because the market was positioned (all conjecture) for a dismal one based on the auto strike. And: all the revisions were to the upside, so the momentum could not be better. However…

The reason why I’m making this statement and including a chart to provide as a backdrop for my hesitation of any “all clear” signalling, is because the signals I’m watching via my technical eye seem to be setting up in a far to picture perfect pattern of something else. That “something” concedes caution. Let me explain…

As you can see on the chart blow, it is of the S&P 500™ as of this writing, before the cash close on Friday. The reason why I want to use it is because the final workings to fill it in are still being laid out by the markets. I like it when this happens, because it allows for everyone to see if the assumptions are playing out according to the patterns – not what I “think.”

As I’ve noted, too many times to count: when the “machines” start leaving trails like there’s nothing but machines making the moves? That’s a time to pay attention, and this appears to be one of those times, because the resolution is very consequential. Repeat: very!

So here’s said chart. To wit:

(Chart Source)

We should know over the next few trading days soon enough.

Fun and games indeed.

© 2019 Mark St.Cyr