Richard Rhodes | Nov 07, 2013 02:05AM ET
STOCKS: The world economy is muddling through. Sequestration and continued Congressional argument regarding government closures and “debt ceilings” are clear headwinds to the US economy; while China is showing signs of trying to cool inflation. The Eurozone remains mired in inaction, athough showing nascent signs of growth. Quite clearly, we feel risk is being mispriced at current levels given the economic backdrop and developing pressure upon corporate revenues/margins/earnings. But, the QE pillars continue to hold prices higher than in non-QE times.
STRATEGY: The S&P 500 remains above the 160-wma long-term support level at 1397; and the standard 200-dma support level at 1621. But perhaps more importantly, the distance above the 160-wma has regained the +23%/+25% zone that denotes a “bubble-like rally” threshold. If it expands towards 30%, then an upside explosion may be under way.
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