Stock Market -- Daily Chart

Back on 8/19, I posted that the SPX had trend support down in the 1630 - 1640 area.
The market closed at 1646 on the 19th but it was not until the final week of Aug. that
the SPX dropped to the trend test area. As fate would have it, the PMI data for US mfg.
and that of other nations was published right after Labor Day. The numbers were strong
and were followed by good services PMI's as well. Players liked these strong readings and
have rallied the stock market since 9/3. Other cares and woes have been set aside in the
process as the SPX has moved up from a mild short term oversold. SPX Daily

The rally has taken the SPX up through the important 10 and 25 day ma's. The 10 day
has turned up and there will be stronger trending support for this rally if the 25 day turns
up and if a rising 10 day can also move above the 25.

The bull run from Nov. 2012 remains in place as the market has been registering higher
highs and higher lows throughout the year. But note that as the rally has matured, the
advance of the SPX has lost considerable momentum since May reflecting much stronger
Fed talk about QE tapering and, perhaps an accelerated rise in long term bond yields.

The market is trading at a 7.2% premium to the 200 day m/a, so some of the hefty
intermediate overbought in place since the spring has been worked off. The guys have
been in there to buy the dips and the SPX has not experienced the stronger negative
action which far more often than not follows a heavy duty intermediate term overbought.
If you have been long over the course of the year to date, you have beaten well established
odds.

My thought over the past month or two has been that the SPX up at the 1700 level should
prove a formidable challenge for the bulls on both technical and fundamental grounds, but
the price action even recently has yet to support this conjecture.