SPX -- Daily

Here is a link to the daily SPX using closing prices: SPX

 1) Both short term and long term trend support sit at SPX 2000 (long term support dates back
to late 2011). The market broke long term support at 1900 with the Oct. '14 sell off, but did
subsequently rally back into the rising price channel. Now there could be another test.

2) It is interesting that the SPX has experienced a little difficulty holding above the 2000 line
which was first crossed in late Aug. and shortly before the shutdown of the Fed's QE 3 program.

3) Nearly mindless herd behavior remains in effect as players have been drawn into steep
whipsaw action in recent months.

4) The market is a mildly oversold -2.3% below its 25 day m/a and is approaching an oversold
on RSI. The trends of RSI and MACD are down and not encouraging.

5) My argument for several months has been that without the QE program in place, fundamental
risk is now substantially higher and that return potential might be more restrained than in recent
years. An elevation of volatility is already evident.

6) I have also argued that the bulls have, since late 2011, used the powerful QE program as
a backdrop to push the p/e multiple up on the premise that low inflation and interest rates
support the idea that the discount or hurdle rate on the market would fall circa the 1960s.
Moreover, since this narrow focus strategy has been a winning one, I have pointed out that
its continuation would lead to 2500 on the SPX by the end of 2015 and a p/e of 20x.

7) But now we have to see whether the absence of the Fed at our backs will enable the
bulls to keep the narrow focus or whether other fundamental factors will work to challenge
the thrust to a higher p/e out in time. This powerful bull story has not been defeated yet.
We can see the waning of momentum in the recent action of the chart, but the kind of
sustainable trend break needed to shift the market trajectory to a less positive line and
away from the current still rapidly rising channel has yet to occur.