Something happenned last week that is significant. It was also a tiny bit unexpected, at least by myself. That something is “rotation”. The latter occurs when the market leaders take a breather another sector or sectors take over and start to rally, such that the overall index is still higher. Last week early in the week, the leaders like Google took a breather. But latter in the week some of the secondary stocks rallied and the SPX closed at another weekly high. The outlook after this rotation is still bullish. We have squeezed the shorts thoroughly, as I expected from the exact day of the low six weeks ago.

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I said at the time “this rally would last weeks not days”, and here we are. But like I said the shorts are now thoroughly squeezed. The risk now is that the market forces new fresh money off the sidelines and drives the market to new all time highs. That is different buying then a short squeeze, and if it occurs, sentiment will shift from “afraid to be short”, where I think we are now and move to “the bull can’t be stopped”. We aren’t there yet and the only thing that will get us there is higher prices. I expect higher prices. 

Thanks,

Joe