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Christopher Lewis
S&P 500 daily chart, November 05, 2019

The S&P 500 has rallied a bit during the trading session on Monday to kick off the week, as it appears that “everything is awesome” yet again. However, keep in mind that it won’t take much to make this market pullback. At this point, I like the idea of buying value, especially at the 3050 level where we should see some type of structural support. Beyond that, the 3030 level would be my next level of interest, and then the 3000 handle. If the market were to break down below the 3000 handle, then it would be a very negative sign indeed. Ultimately, I believe that this market will find a reason to go higher, based upon the central banks around the world liquefying the markets, as we have seen over the last decade, stock markets have nothing to do with the underlying economy or companies, and more to do with whether or not the Federal Reserve is going to cut interest rates or be very loose monetary policy.

S&P 500 Video 05.11.19

With that, we are stuck in this perverse cycle where poor earnings mean “loose money” which means higher stock prices, while strong earnings mean a strong economy where we get higher stock prices. Quite frankly, the Federal Reserve has been pushing money into the stock market for years now, as the interest rates on bonds are far too low to make any type of return. This is a bubble, but bubbles tend to run much longer than people can expect, so at this point you can only trade with it, not against it.

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