After the big dip in December 2018, the S&P 500 (SPX) followed the "V-Bottom" all the way back up to hit the new high levels at about $2,940 this Friday. See the Graph immediately below.
Along the way up, you can see that the SP500 "waffled" for about 5 weeks (2/25/19 - 3/39/19) before breaking above its upside resistance at $2815.
What happens next? Read on...
From its resistance level at $2815, the SPX ran up to and closed on the current new high at around $2940. Does the waffling start again? Even it does, the market will eventually "break out" and move up or down from here. Yes, but which way will it go?
My opinion is that, waffling or not, the market (SPX) will "melt up" for the next 4-5 months, at least. Of course, this new "run" does not have to be, and probably won't be, a smooth ride to get past the $3000-$3300 level.
To stock investors, "melt up" is a term that investors use when the market goes up for no one reason, and maybe for no recognizable reason at all. For example, economic indicators like interest rates, earnings, tariffs, etc., can be just "OK" but not great, and in spite of all of this, the market may go way up anyway (melts up) because investors continue to buy stocks instead of putting their money in bonds, precious metals, real estate, etc. Therefore, since most investors HATE to be sitting on cash, stocks are the "lessor of all evils", and the bulls "push" stock prices up.
On the other side of this, "something unsettling" could come along (and it does not have to be something terrible) that could upset the upside trend, and send us into a big correction.
MIPS navigates us through these nightmares with its hundreds of indicators and mathematical algorithms that it calculates each day to predict the market direction (which would take us 3-4 months to calculate ). Stay tuned...
Paul Distefano, PhD
CEO / Founder
MIPS Timing Systems, LLC