Yellen Gives Bulls Another Lifeline

 | Jul 12, 2017 | 1:41 PM EDT
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Following the gap up open this morning, the indices have been trading in very tight ranges. The Nasdaq 100 ETF (QQQ) is at intraday highs and the S&P500 not far behind, while small caps lag. Breadth is still a very robust 5 to 1 positive and the number of new 12-month highs is expanding to nearly 400 now.

Recently the bears have been growing louder about a possible market top. The primary argument has been that a more hawkish Fed and the run-off of their huge balance sheet would be the catalyst for a correction. It is a very understandable argument and some big-name hedge fund managers think it is likely.

The problem is timing. It has been the problem for the last eight years and it is still the problem for the folks that are inclined to call market turns. Just when they think the central banks are going to be less accommodative, they throw out a lifeline and the market rallies. Janet Yellen was not expected to be particularly dovish today in her testimony but she did make it clear that the Fed is in no rush for tighter policy.

There is no doubt that at some point the central banks are going to trigger a sizable correction. There is no way they can reverse the excesses of the last eight years without some repercussions. It is futile to try to time this event with any precision. The Fed has a vested interest in not disrupting the market and that is why we have Janet Yellen doing the sort of thing she did today.

It's a very strong day for the market and the bulls are happy with their positions, but the folks that want to put more cash to work are having a harder time. The entry point was yesterday and now the entries are less than optimal.

I'm going to be on vacation starting on Friday so I'm not inclined to add positions even if I did find some things and I'm not.

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