“I know you ‘warned’ that you’d be too busy this week to pen your daily musings, but that doesn’t mean you’re not missed! (especially when 2713 on the S&P is making it harder to wait for the pullback—let alone a full retest, as others still opine—to reinvest the partial (I stress ‘partial’) cash recently raised). Safe travels . . . oh, and is there a print that would switch the near term bullish view back on or is the available energy even lower now and still needing to be recharged?"

. . . A Raymond James financial advisor

So, I need to apologize to everyone for not being able to do a verbal recorded call last week, or write a missive the last three sessions of the week. The problem was that while in NYC my media events began around 6:00 a.m., followed by more media events, then it was portfolio manager meetings. From there, it was gigs for our financial advisors and their clients with a dinner getting me back to the hotel around 10:30 p.m. In my 50s I could sit down at that time and write for the next few hours, but at 70 I just can no longer do it. As for the few hate mails I have received suggesting that I didn’t write because the S&P 500 (SPX/2706.53) has overrun my 2600 – 2650 trading target from the December low that we identified, that is pure nonsense since I have repeatedly noted in these missives when I was wrong and this is one of those times. That said, I have been adamant that there would be no retest of the December lows. The three-session selling squall ended with a selling climax on December 24. Then over the next two weeks there were two 90% upside days, meaning 90% of the total up/down volume came on the upside. In the 80-year history of the Lowry’s organization in almost all of the time that sequence suggests a major stock market bottom has been achieved.

Meanwhile, as the uber-smart Jason Goepfert writes:

  • "Record flow. Comprehensive data on mutual fund flows confirm that the massive loss in December for equity funds was the largest on record.
  • Back to disbelief. After more than two years of expecting stocks to rally, U.S. consumers have become pessimistic. This has ended a streak of 25 months with more consumes expecting stocks to rally than to decline.
  • Mom and pop aren’t buying. After a 5-week rally in stocks, bulls still make up less than 40% of respondents in the AAII sentiment survey."

Despite these factors, the leap in stock prices has left the overall stock market pretty overbought on a short-term trading basis. But as one Wall Street wag notes, “The stock market can stay overbought longer than you can stay solvent!” Interestingly, by my work the stock market’s internal energy has been rebuilt even in light of the recent upside strength, which is a rare occurrence. This implies that the S&P 500 could continue to stagger higher into the often mentioned energy peak in mid-February. Do I trust it? Not really, but in this business you have to take what the markets give you.