|  Sly Stone 1971 This week presidential elections continued to be volatile (like the markets). Trump showed up for a rally in Albuquerque, New Mexico and a riot broke out. Protestors broke through police barricades and tear gas had to be deployed to calm down rioters. In a similar fashion, a critical technical barricade holding back stocks is a trend line that has been in place for well over a year, was swamped by a herd of bulls this week. The stock market remains unfazed by the backdrop of unfolding political turmoil being brought to a boil by the upcoming presidential election. Equities put in the best week in months led by the lagging NASDQ 100 (QQQ) which was up 3.4% for the week and almost 5% this month. This big improvement in the QQQ’s led to a powerful phase change from distribution back to bullish in one fell swoop. One of the best barometers of the US economy is the Russell 2000 (IWM) and that roared as well, moving from bearish to a bullish phase this week on strong volume registering 3 accumulation days. Market Internals show that NASDQ breadth is much improved with both spikes in its new high /new low ratio along with a strong surge in the up/down volume ratio. Speculative money is trickling into the market led by Semiconductor stocks such as AMAT and NVDA, while defensive plays like gold and gold miners backed down and retraced into a warning phases but remain the strongest performers this year. Commodities (excluding gold the miners), even though facing a rate hike, firmed with sugar (CANE and SGG) leading agricultural assets higher. This begs the question is the Fed behind the inflationary curve? Short term the Yellow flag is volatility and it’s indicating some extreme bullishness as its trading at the bottom of its trading bands. Longer term measures that could keep a lid on such as valuation as measured by PE are much overbought but it’s not a good timing indicator. Contradicting extremely bullish overbought readings from the options market, cash levels indicators are high and investor sentiment is at the lowest bullish levels in over 10 years, which is consistent and very bullish. This is a strange anomaly which one can only surmise that those left actually playing the options markets are overly bullish. So if we don’t get smacked from something unexpected there is plenty of fuel in the tank for a long trip. There is enough money sitting on the sidelines that the best of both value and the more speculative plays could get a meaningful lift. According to Mark Hulbert who tracks numerous market timers, one of the best seasonal indicators is very bullish going into this week. Check out this week’s video for critical support levels. | 
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