A well-telegraphed market advance

Mid-week market update: The S&P 500 has risen to a new all-time high, and this move was well-telegraphed. I wrote on the weekend and characterized conditions “half-hearted buy signals that indicate low downside risk”.


The S&P 500 subsequently staged an upside breakout from a bull flag to a fresh all-time high.



The move was even more impressive on the S&P 500 hourly chart. The index staged a furious last hour ramp on Friday on no news. The market retraced about half of the advance on Monday on an intra-day basis on concerns over a weak ISM report, but reversed upwards to close the day in the green. It saw a similar pattern of weakness and reversal Tuesday in reaction to an anemic jobs openings print from the JOLTS report. And on Wednesday the S&P 500 blasted off to a new all-time high.




Bullish confirmation

The upside breakout was confirmed by cross-asset return patterns. Treasury bond prices broke out of a minor resistance level. The USD, which has been inversely correlated to stock prices, was rejected at resistance. Oil prices weakened in reaction to this week’s OPEC decision, which should be positive for the headline inflation outlook.