Check out the high of the day: 1406.64. Check out my morning post (here) where I noted my Overbought level at 1406. Sometimes it happens that way. The market wants higher, much higher, and will look to interpret any news as positive news; just look at today’s GDP release compared with expectations. China reports PMI on Monday night and Germany reports PMI on Wednesday morning. I think European news is the major catalyst for U.S. markets and if digested well, we could be at new yearly highs on the SPX sooner rather than later. Any pullbacks to 1390 or lower, I’m a fan of buying.
To review this week’s strategy comments: I suggested in the beginning of the week that any move below 1372 would be temporary and should market participants like what they hear from Apple, we would see 1390 on the SPX by the end of the week. That target was reached on Wednesday and the SPX is now comfortably above that critical target. I still expect some sideways-to-slightly-negative action at the beginning of the next week, but have no doubt the SPX will eclipse 1422 by mid-May.
Check out the chart below (Doug Kass via Jeffrey Gundlach via Business Insider). It’s a cute comparison and certainly shows the parabolic nature of Apple’s recent move. Given the correlation between equities as a whole to the performance of Apple, the SPX would have a rough time if that pattern were to replicate. But Apple’s scenario won’t play out like that.