Stock Market Update

The bull case is as follows: Top line business sales growth momentum may slow some this year,
but the outlook for earnings continues excellent reflecting large corporate tax cuts now on the
book. Interest rates may rise further, but since inflation pressure remains quiescent, the Fed will
remain on a gradual course of tightening monetary policy. There is no excess liquidity in the US
system, but there may be some further rotation out of a weaker bond market into stocks. Moreover,
share buybacks could surge over the next fifteen months as companies tap larger cash flows. And,
there may be additional foreign interest in US stocks. There are exogenous factors to keep a close
eye upon, including a possible heavy duty bi-lateral trade war with China, fallout if the talks with
North Korea fail, a Syrian conflict that could go beyond its borders and a crisis if Trump blows
up the DOJ and the Mueller inquiry.These clouds could clear up rather quickly, giving investors
a clean shot at the prior top over 2800 SPX, or they could linger and force market players to make
further adjustments.

The SPX chart reflects a cloudy crystal ball. There is a bearish falling wedge pattern forming, and
the SPX is struggling to hold the uptrend in place since early 2016. But the market is holding
above its 200 day m/a and a 2600 support level.  SPX Daily