S&P – 23/1

The S&P 500 is at new multi-year highs, after creating a basing pattern for most of January. The pattern of morning selling and afternoon strength, which is evident in the last days, is a further sign of a bull market.

Investors seem to have no fear in a world where the biggest central banks follow loose monetary policies. Market volatility as measured by the VIX is at historically low levels, proving there is complacency in the market.

At the same time, individual stock volumes are very low, meaning there is not a big convinction and participation behind the upmove. Retailers are not part of the game yet, so there is no one that institutions can “load” the stocks to, which in turn speaks for a continuation of the upmove and its manipulation tactics.

We are still on the long side. Technically, the major threat for the S&P is the creation of a major double top formation. We will use 1.474 as a stop loss for long positions on S&P futures, because if we close below this level it would suggest a false breakout above the 2012 highs. 1500 is our first target for the S&P.

The Nasdaq is lagging S&P a bit, being below its own 2012 highs, thus not really confirming the S&P move to 5-year highs.

Q4 corporate results are the main focus of S&P traders.