SPX -- Monthly

The SPX remains in a cyclical bull market and is experiencing its third leg up since the bottom in
early 2009. The third leg commenced in Feb. '16, and was confirmed during the past year by a
positive turn in the very important monthly MACD measure.  SPX Monthly

It is very difficult to judge how far and how high this leg may carry. There is sufficient capital
slack in the US economy to carry the market well into 2019 even though the labor market is getting
tighter. Also, there are plans to be debated in the Congress to cut taxes, repatriate foreign retained
earnings and develop a sizable infrastructure program. It seems at this point that the Trump admin.
would prefer to fund most of the contemplated tax cuts and increased spending on infrastructure
projects via substantially larger Treasury and agency funding. The size and funding of these
programs must pass muster in a Congress which richly embodies the deep political, economic and
social divisions in the US.

Since the first powerful surge of economic recovery which completed over 2010 - 2011, the pro-
gression of economic expansion has been slow (real growth) and low (modest inflation). The Fed
has choked off growth of basic liquidity since the end of 2014, and is now following a policy of
gradually raising short term interest rates. Headwinds have replaced powerful tailwinds on the
monetary front and the market has moved from a low risk / high return environment to one of
rising cyclical risk and less assured returns.

With both labor force and productivity growth running low, future business sales and earnings
growth potential are running well below long range experience, the stock market is reliant on
a continuation of low inflation and interest rates to remain competitive in the capital markets.

The stock market is once again running above the upper band of its price range starting from
the end of WW 2.These periods can extend for a few years, but downside price risk is rather
high even though a bear phase may not now be imminent.

Investors are so keenly interested in the Trump admin.'s stimulus programs because they forsee
accelerated economic and earnings growth coupled with probable moderate Fed tightening and
faster but not skyrocketing inflation that would combine to give them a shot at earning excess
returns for a few years. Absence of such programs seems to beckon dreary and risky times as
well as lousy bonuses for investment managers and rising career risk in a business that is not
short of capacity.

So, there could be some market downside if the Congress ties these stimulus outlines up in knots
and confounds all the equity investment mangers who are hoping for a new lease on life.

SPX -- Starry Night In Harrisburg

I'll get to the Harrisburg, PA bit in a minute, after some preamble. Back on Apr.14 (scroll down), I
suggested the SPX was nearing a flashpoint. The indicators were negative, but the market was
fast approaching a short term oversold. It hit a low point, and bounced a little last week, before
catching fire for the first two trading days this week.  Confidence was helped over the weekend
when part one of the French election went as expected, but remember as well that The Donald
announced last week that an outline of the tax cut / reform program was to be announced this week.
He "kited" the market yesterday with the announcement that a large cut in the corporate tax rate
could well be proposed, and the Treas. Sec'y added fuel to the fire by hinting that such a cut would
be financed by borrowing, with the resultant stronger growth to "pay for" the cut. This brings us
to the starry night in Harrisburg. In his first 100 days in office, Trump has produced a thin slice or
two above jack shit. This Saturday he holds a rally in Harrisburg, and hopes to cover very anemic
performance by touting his tax plan and bragging about how well the market has done since the
election. Maybe he will pull it off, maybe not.

As he tries to pull the market into his world, the short term economic indicators continue to suggest
that a flattish market is the best prospect. The rest of the week will be busy in DC. The boys will
need to sign off on keeping the gov. open; there will be more from Trump on tax cuts; and there will
be feedback on the tax plan and the wealth care er, health care plan from the Congress. As well, with
the nuclear submarine USS Michigan docking in South Korea to complement the USS Vinson
battle group now (presumably) in position in the Sea of Japan, it will be young Mr. Kim's chance
to pop off.

Attached is the SPX Daily chart. What is that old rule that price gaps are eventually closed?

SPX -- Weekly

Fundamentals
The stock market has been in a strong up leg since Feb. '16,  a move that brought it to a new all-time
high as Mar. of this year began. The weekly cyclical economic indicators turned positive around the
Feb. last year and powerful momentum for this indicator set appears to have provided the requisite
underpinning for the market's advance. The indicators are forward looking and it may be important
to note that this set has now been flat since Jan. of this year, suggesting economic momentum may
slow out ahead. In turn, the SPX, which hit an interim peak at the outset of Mar., has been in
moderate corrective mode since. The market hardly moves in lockstep with the indicators, but the
suggestion here is that, barring an upturn of the indicators, the SPX should continue on the flat
side. As a secondary factor at this point, inflation pressures have recently eased, and this may keep
the Fed from more aggressive tightening action over the near term. A less aggressive Fed is a
positive for stocks, but since the progress of the SPX over the past year has been fueled by expec-
tations of strengthening progress of business sales and earnings, there could be an adjustment
process for stocks to complete, especially since the development of new fiscal measures to
stimulate economic growth may be getting pushed further out in time as the Trump team figures
out how to work better with the Congress.

Technical
The SPX has been working off a substantial intermediate term overbought. There is nothing in
the weekly chart to suggest this process is about to end. Adjustment is already well underway
with the RSI and oscillator measures, but the important MACD measure has just turned negative.
Moreover, the SPX is still at a 4.6% premium to its 40 wk. m/a. The premium is contracting,
but it is still significant. There is no inevitable negative conclusion, but do not ignore the
evidence.  SPX Weekly

SPX Daily -- Crossroads Ahead

The SPX has been working off an intermediate term overbought. In the meantime, the daily chart
shows that corrective action is tilting toward a flashpoint.  SPX Daily

Based on closing prices, the SPX has been in a downtrend since the end of Feb. Notably, the 25
day m/a has rolled over and the SPX has failed to rally above it. The market is in a mild
oversold condition, and both RSI and MACD have declined near important testing points with the
30 day ROC now in mildly negative territory. Corrective action has been moderate so far,
but the shorter term indicators show the worst readings since the recent market upturn began in
Nov.

I have been wondering for weeks whether the Nov. rally would follow the other two which took
place since the market turned up back in 2/16, and ultimately finish up with a test of the 200 day
m/a. That would be compelling symmetry, but there is hardly enough logic in the market to make
it happen. Even so, it's heads up time from a technical point of view.

We roll into Easter weekend with tensions again running high on and around the Korean peninsula.
There is The Donald to contend with and new leadership in Seoul. The odds are that the US
command is telling the President to cool his jets and wait to see if his new best friend, President Xi
of China, has any magic to work that gets us all off the hook. Market players do not seem very
concerned, but always keep in mind that this particular area of the world is strewn with mis-
calculation through history.

I plan to post again on the weekly SPX chart by Sunday evening.

SPX Weekly -- Quickie

The SPX was knocked off the rally trend from Nov. and now has turned weak on the MACD
indicator.  SPX Weekly

The market has been working off a substantial intermediate term overbought and although there
has been some downward pressure in recent weeks, there has been no decisive break yet to shift
market player attitudes away from a bullish posture. As outlined in the 3/26 SPX Weekly (scroll
down), fundamentals suggest continuation of a flat market.

Gold Quickie

Tensions between the US and Russia helped the gold price this past week. Moreover, with Rex
Tillerson, US Sec'y of State and a Putin pal, scheduled to meet with Russian Bigs next Tues. in
Moscow, there could be additional  US / Russia diplomatic fallout ahead. Because the USD also
rallied this past week, the gold price might require more tensions to stay afloat in the short run.
The indecision in the market is captured by the fact that gold closed out the week just around its
40 wk m/a.  Gold Weekly

Gold (GLD) -- Weekly

The pace of global economic recovery since the Great Recession ended in 2009 has been slow, with
cyclical inflation low. There was a speedy interval from mid - 2009 and running into 2011, which
was when gold, freakishly, entered a price bubble. The subsequent blowout came to rest at the end
2015, when the gold price had fallen down a little below the all in cost of producing an ounce of
the stuff.  GLD Weekly

The economy started to regain some growth momentum in 2016  as did inflation and the gold
price, although highly volatile, has trended higher off its post bubble low. Bottom line, gold has
advanced at a muted pace since the low as it should given dollar stability and a still modest set
of economic expansion and inflation data. From a technical perspective, gold is in rather neutral
territory in terms of oversold / overbought and its premium or discount to its 40 wk m/a. In fact,
the metal is about to tackle its flat 40 wk average presently. Failure to break above the "40" would
be a negative.

Speculation about a Trump pro - business policy in favor of faster growth (and more inflation)
has eased greatly in recent weeks as markets players reassess the programs' outlines in terms of
whether they are doable from a political perspective. There is more intensive questioning about this
issue, but the towel has yet to flutter over the ropes by any means. The USD rallied nicely after
the election, but has drifted lower recently, and is in the process of testing its 40 wk m/a, but
to the downside. If sentiment in the markets again begins to favor the Trump stimulus plans,
the dollar could rally and this might put some short term downward pressure on gold as players
buy stocks instead. If sentiment about Trump's ability to get his way weakens further, the dollar
could come down more and gold would likely be favored. $USD Weekly

The economy could well slow down some time later this year as could inflation pressure.
Everything equal, that could lead to a trading range for gold. If the Trump plan passes muster,
that will help gold down the road as would a nasty turn in US - China trade policy which may
also hit the Trump docket.