SPX SHORT TERM SETUP. CORRECTION IS PROBABLLY UPON US

LONGER TERM COMMENTS.

Besides my boo hoo bias for fundamentals, that will continue unless I see real pickup.....stocks are "technically" VERY STRONG with small cap and mids outpacing large cap stocks.....I will probably (don't fall out of chair) go LONG small caps using ETF 3X when correction concludes....If one plays stock market based on fundamental analysis only one will surely lose most of the time. NO sense in lookingback and what you didn't do, we are HERE and NOW so what are opps going forward.

Short Term worries:

% of stocks ABOVE their 30 DMA (day moving avg) hit a LOFTY MT K type 95% !! 80 is considered over bought....extremes always get corrrected....

But as stocks kept creeping higher the % above 10 DMA has been slipping suggesting more selective buying.

Advance decline lines had made new recovery highs at recent highs suggesting healthy advance.

A FALLING VIX is BULLISH, a RISING TREND VIX is BEARISH fear continues to melt away.....dwindling selling intensity = room for prices to move, shoot or drift higher....law of SUPPLY and DEMAND controls all things....especially price.

Not seeing the economic recovery on the STREET, the wild eyed bullishness of avg Joe has not perculated.....a lot of firsts in this rally so a top when it comes may come without the little guy buying the top.

OTHER CONSIDERATIONS:

8 MILLION PLUS lost jobs during the great recession from 2007, that says to me, 8 MILLION not contributing to 401k's, at least not like they were, cash balances at MUTUAL FUNDS at very LOW levels, not supportive of buying.

EQUITY in HOMES blown away, so not supportive to borrowing and spending.

FED POLICY is behind the rally and liquidity flows, and they signal NO CHANGE COMING.

SAFE money nary exists, so are stocks only game left? forcing money into risk usually ends badly....down the road.

Market could consolidate as it did in 2004....it is following that path rather closely.

An unforseen accident or crisis is possible to roil markets but can't always know what or when.

ONLY A SUSTAINED PICK UP IN SELLING would change technical picture, but that is not present today....in fact most TA IMHO suggest the potential for 6 months or longer of current trend...I would target SPX 1200-1250 which is around next FIB retrace as target.

ON MAJOR UNSETTLING consideration of BULL MARKET is the continued DOWNTREND or the "30 DAY UP AND DOWN VOLUME" indicator. It PEAKED iN APRIL!!!! and I had posed this question before to one of my subs and I beleive the answer was this had not occurred during any previous bull market.....but here it is with prices rising from lows at a record.....It had been BELOW a FALLING 200 DMA since JUNE of 2009.

SO the short term picture appears to be leaning for a correction, and the rally may show small caps outperforming its bigger brothers.

Long term yields continue to perplex with 10 year at 3.7% ish, which is rather puzzling considering the 70% PLUS stock market rally, you would think the money comes OUT of BONDS and INTO STOCKS, and if all is going so well, why the FLIGHT TO SAFETY?

AN accident in BONDs causing long term yields to SHARPLY RISE could change everything.

I still consider this a rally within SECULAR BEAR, the claws may be in, but not ripped out...JMHO

Duratek