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An artist is not paid for his labor but for his vision.

James Whistler

The COT index value this week remains positive at +13.5%. This would suggest continued strength in the market.

Increasingly around blogoland you will hear arguments with relation to valuations, bubbles in financial assets, duration of the current bull run, a weak economy, although this can be construed as a bullish argument. They are all true, but also irrelevant.

The market is running on sentiment, lack of alternatives and of course the seemingly unending QE from the Federal Reserve. With Yellen seemingly the front runner for Bernanke’s position, the continued QE looks secure into the majority of 2014. If that is the case, market valuations will continue to rise in the face of almost any data that you care to look at.

Technicals

On all time frames, 1yr, 6mths, 3mths, there is plenty of [technical] room to move higher into what is now blue sky territory. Breakouts from consolidation are largely correlated to the length of time that the consolidation took place. The charts show a consolidation from 2000, so thirteen years. This bull market could have a lot of legs under it still.

In the very short time frames; 3days, once again the market is in a very neutral area, in an uptrend. Therefore, if the market dips on the open this is a definite buy-the-dip opportunity. This would be in the $178.5o range. Should it gap higher, avoid shorting for a pullback, these trades are going to carry excessive risk if the market runs higher fast.

The only time frame that I would watch, where a pull-back could occur is the 15day time frame. Resistance is present at the $180.5o area. I would expect to see this price target hit early in the week. After that, there could possibly be grounds for a pull-back into the end of the week, but, this could be very news dependent, with short-term sentiment carrying the market through the level.

Seasonally we are entering a very bullish time for stocks. This is not a time to be initiating short positions. Rather it is more about holding winners and extracting as much profit as possible from them into late February, possibly even early March.

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