SPX -- Weekly

Technical
The SPX continues to rally off the double bottom of earlier in the year, but, not surprisingly, has lost
some of the strong positive momentum that has characterized this move. SPX Weekly

Obvious downtrends in key indicators shown on the chart are in positive reversal mode after
months of heading south. The SPX has entered an intermediate term uptrend, but not without
caveats. Notice the RSI in the top panel. It has had trouble clearing +60 during the rallies that have
occurred over the past 15 months. This suggests the overboughts have been modest and not
healthy in the sense that vulnerability has been a continuous question. As well, note that the 13 wk.
m/a has yet to challenge the 40 wk. The last such challenge came at the end of 2015 and the
failure set the stage for the poor beginning of the current year.

The indicators on the chart do not show a current intermediate term overbought condition, and
over 3000 chart patterns are nicely positive. However, this measure seldom gets more positive
than it is currently, which suggests very full participation in the advance.

Fundamental
Business sales and profits continued their decline on a yr/yr basis through Q1 '16. SPX net per
share continues to run about $100. at an annual rate. The bright side here is that the weekly
leading economic indicators I follow as well as the monthly PMI new orders reports have turned
clearly positive, suggesting stronger US economic performance as 2016 progresses. This is a very
welcome development. In addition, the yr/yr growth of real monetary liquidity, although sliding
in momentum, is still strong, especially given the chronological age of the current economic
expansion.

The stock market has clearly benefited from the sharp, seasonal rise in the price of oil in recent
months. The oil price is set to transition into a seasonal consolidation phase just ahead. Given the
on again, off again nature of industry chatter about the possibility of oil production constraints,
price volatility out until Aug. or so may be stronger than usual and this could play into the stock
market narrative.