Stock Market -- Weekly

Technical
The weekly SPX is still trend positive off the Nov. '12 interim low, but there has been
enough damage done to note that the weekly SPX close needs to stay above 1600 going
forward. The market remains importantly overbought on MACD and against the 40 wk
m/a. The indicators which accompany the chart are shakily positve. SPX Weekly

The weekly breadth reading of the NYSE has deteriorated recently, and, with the
cumulative adv / dec line having fallen below its 6 wk moving average, a warning shot
has been fired across the bulls' bow. NYSE A / D Line

Fundamentals
So far, the latest and very large QE program has not yet proven strong enough to buck the
economic headwinds the US faces. Financial liquidity is growing faster than the economy
and the excess liquidity has been flowing into equities and residential real estate prices.
Stocks have been benefiting from a very high threshold of investor tolerance regarding
continued indications for a very slow economy as players hold their noses and await
better data.

Federal Reserve Bank Credit has surged enough over the past six months to not only
inflame the hawks on the Board but staff economists as well. The surges in the stock
market and in housing prices are encouraging QE push back. Stocks recently turned
effervescent and rising mortgage rates and home prices are working to reduce housing
affordability. Fed members are talking about tapering or shrinking the growth of the
program not just for economic academic reasons but to try and trim enthusiasm especially
for stocks. If the Fed had brassier balls They would challenge Obama and the Congress
overtly and more unreservedly to put some sizable stimulus on the table to push up
economic demand and employment.

My weekly leading economic indicators are quite volatile but on balance suggest the
economy can move ever so wanly forward. My price / cost ratio for business suggests
further pressure on profit margins without the intervention of more cost cutting and a
continued high level of stock buybacks to hype net per share (and top executive bonuses).