Let me put this whole discussion to bed by saying the following. If Congress attacked economic growth with the same devotion they are investigating these scandals, we’d feel the difference. In the very least we would not have doubt about whether the President’s growth agenda would be accomplished. Congressional leaders told us the first month we would have a very strong indication of what would be accomplished this year by the end of the first 100 days. The President is doing all he can by executive order, but when it comes to enacting change via Congressional legislation I do not believe we are any better off in knowing what is possible this year then after the first 30 days. I believe the situation is less clear now as opposed to February.
What can we expect from this week? As you can see on the chart Transports is still not ready to drop as it started the week retesting the breakdown. Suddenly, last week trading slowed down for huge stretches of time. We’ve hit summer trading. The week started decent enough, we should get more of the same. Tech leaders will continue to lead but Transports remains questionable. Housing is back at the highs but banking is lagging. Crude oil turned up and put in its best sequence since early April. It should consolidate at this level and stay elevated by its seasonal factor the next handful of weeks. It is going to take a lot to torpedo this freight train.
Topping is a process, it’s not an event. Here’s the bottom line, when the VIX gets to the kind of euphoria levels we’ve seen recently, a market correction isn’t a matter of “if” but when.