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This week’s COT index number is +7.8%. Improving strength. In the current market we are at a point of indecision. It could move either way. So with a stronger COT number, my bias is to the upside. Are there confirmatory signals elsewhere in the market?

Technical

We are in a short-term uptrend in 15day, 10day, 5day time-frames. Only in the 3day time-frame are we in a downtrend. Support sits at circa $183.oo, which is a buying point long should the market trade that price. I would expect that price to be hit near the early part of the trading week, with the market trading higher into the close of the week.

Technical Trade.

Enter a Bull Spread in SPY [Buy $182.oo, Sell $183.00 @ or around the support level at $183.oo] dependent on pricing, as the trend and COT index number support the thesis of a long position out of the support area.

10yr

The 10yr has pulled back to the moving average. If it finds support and trades higher – what if anything does this mean for the market? At the moment stocks and rates are not tightly correlated, so there is nothing that really has any evidence one way or t’other. For the moment ignore. Bond rates are returning below the inflation rate and are therefore as an asset class, not particularly attractive.

Earnings

Have been pitched so low that most should clear the hurdles set. Currently stocks are more about inflationary pressures. Until the Fed stops creating credit, and the T-Bills etc trade higher, stocks will continue you trade higher as rising capitalisation values provide the return against inflation. This can only continue until it doesn’t. Therefore, unless you are trading individual names, the aggregate of earnings should be positive for the over-all market.

Healthcare

Looks, compared to the over-all market, ready to revert to the mean, thus a trade could potentially be structured for this.

Entered Trade

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