What Conditions Exist That Will Take This Market Higher In the Near Future?

 | May 15, 2018 | 1:58 PM EDT
  • Comment
  • Print Print
  • Print
Stock quotes in this article:

TLT

I frequently preach that it is better to use the price action as a way to navigate the market rather than to try to predict what will happen based on news and fundamentals. As I wrote this past weekend: "Predicting the Future is an Overrated Trading Strategy".

However, when considering the current price action we can't completely ignore the future. We have to consider what potential catalysts might exist. Currently the charts of the major indices look okay but I am asking myself what conditions exist that will take this market higher in the near future.

We know from the reaction to first quarter earnings reports that valuations don't seem to matter much. Despite good reports and strong growth, stocks did not react favorably to the news.

Ironically negative news like trade wars often ends up being a positive catalyst. President Trump has a pattern of making very aggressive decisions and then backing off which causes a positive market reaction. We saw this with Korea, trade wars, drug policies and a variety of political issues.

One major concern is that since the top in late January the character of the market isn't as buoyant. We have had three good rallies and some V-ish action but it didn't persist like it did in the past. The pullbacks have bene abrupt and have had better momentum.

My biggest concern is interest rates. The chart of the 20+ Year Treasury Bond Fund (TLT) looks extremely poor and suggests that rates are going higher.

The bears have long believed that higher rates would eventually kill this market. They have been wrong for years but the potential that they may now be a negative catalyst is growing.

Columnist Conversations

BIDU has triggered a buy entry against the cluster zone.  My risk can be defined either below the 5/23 lo...

BEST IDEAS

REAL MONEY'S BEST IDEAS

News Breaks

Powered by
Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.


TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.