I think we’ve got a situation where it’s a bit of a “perfect setup”, and we should continue to see plenty of upward momentum in this market.
However, the fundamentals do not suggest that the market is going to fall anytime soon, and there’s nothing out there to suggest that we cannot break out to the upside. The Bank of Japan continues to do everything it can to keep interest rates low in that country, which means they are buying unlimited bonds. This is the same thing as printing money, commonly called “quantitative easing.” On the other side of the equation is the Federal Reserve, which is tightening monetary policy in a rather aggressive way. Because of this, I think we’ve got a situation where it’s a bit of a “perfect setup”, and we should continue to see plenty of upward momentum in this market.
If we pull back from here, the ?140 level could be supported, as it was the previous resistant barrier. The 50-Day EMA has been rising toward that area for a while, and now I think it probably ends up showing itself as a potential support level, so that being said, the market is likely to continue to look at any dip at this point in time as a potential buying opportunity, especially as the Federal Reserve has a meeting next week that could very well lead to more hawkish rhetoric. It would be a huge turn of events to see this trend run out of momentum, at least for the long term. Short-term sideways action has been the best way for this market to work off Roth for a while, and I think that will continue to be the case going forward. I have no interest in shorting, and I do think that every dip does offer a little bit of value in a market that I think has much further to go.