Why the current stock market is rallying ?
Despite high gas prices and other constraints on the economy stocks rallied hard towards fresh highs. The reason : News, good news. the economy is still in shambles and delicately poised to lose steam if gas and oil prices keep hovering higher. But the stock market is rallying hard driven by the news. Click on the chart to enlarge.
Retail sales came in strongest in the last 5 months. That was at the opening bell. The stocks gapped up. Strong retail sales are indicative of consumer spending and consumer spending is seventy percent of GDP. Retail stocks are all moving higher in tandem.
Than came the Feds meeting which kept the rates unchanged which was expected, but it nevertheless boosted the morale. The market really took off here and went straight up. SPX closed at 1395 and will go to 1400 here in a day or so because its not finished going up higher. There is a huge bullish candle on the charts right now and that will dominate several days of trading to come.
This move is baffling the bears who were hoping for a reversal and it never came. They never trade with the trend, anyway, they always trade with what they feel, and what they feel is not what the charts tell us. if only for once they looked at the trend and the charts it will solve everything. But the mind is a hard thing to change, it refuses to admit empirical facts all the time.
I closed the SPX Calendar in a nick of time. It was not performing as expected. Low VIX was hurting the trade. Right now it is in loss. It needs to be closed to avoid more losses as SPX will move higher and its only 2 days to expiration.
For now the trend is moving higher and we will be trading with it.