SPX -- Weekly

Fundamentals
The SPX is on the verge of an intermediate term buy signal, but there are issues. The market is getting
overbought short term, the Fed has a policy meeting this week, and we are about to enter a "bring on
the clowns" period in the nation's capital where spending bills are on the line, the US debt ceiling must
be raised, and where Speaker Of The House (Paul Ryan) faces his baptism. Upcoming as well, are
a bevy of PMI reports on business activity spanning the globe and info on China's new five year plan.
So, there could be some short run volatility to becloud the market outlook.

Technical
The market has responded positively and powerfully from the lows seen in Aug. and Sep. SPX weekly
The SPX has moved up and through its 13 and 40 wk. m/a's and although the trajectory is too sharp
to be sustained, the indicators are well below overbought levels when viewed over the intermediate
term (3 to 6 months). The signs do not of course preclude a disappointment but they are promising.

With the market having risen rapidly up to and through its 40 wk. m/a, my momentum oscillator is
about to turn positive from a deep oversold for the first time since the final quarter of 2011 ( I do
not show the oscillator on the chart, but it very closely resembles the MACD  which is displayed in
the first bottom panel of the chart). Looking back over more than 30 years of data, since whipsaws
in the signal come seldom when momentum is sharply depressed, the oscillator and the reversal of
the MACD should not be taken lightly. It is unfortunate that the MACD reversal has come only on
the heels of an already strong rally, which confirms the short run overbought in the market.