Technically Speaking: How Do You Spell R-E-L-I-E-F?

In this past weekend’s newsletter. I discussed the potential for the market to hit new highs. To wit:

“The good news this week is that the market maintained last week’s advance despite the one-day tantrum earlier. Interestingly, since the election, the market has ratcheted higher in slightly more than 3% increments with each move higher followed by a drawn-out consolidation process that runs primarily along the 50-75 dma. The last sell-off tested, and held, the 100-dma but stayed within the confines of the consolidation process. The 2400 level on the S&P 500 remains the clear ‘warning level’ for investors currently.”

Chart updated through Monday’s open.

“But this short-term bullish backdrop is offset by intermediate-term bearish underpinnings as shown by the next two charts. With an intermediate-term momentum sell-signal in place, combined with overbought conditions, continues to suggest further gains from this point will likely remain limited and more volatile to obtain. That statement DOES NOT preclude the markets reaching new highs, it just suggests that downside corrective risks outweigh the potential currently for further gains.”

That “gap up” opening occurred Monday morning as “relief” spread through global markets due to the reduction of geopolitical stress as the U.S. once again “caved” to the threats of North Korea.

Over a month ago on the “Lance Roberts Show,” I discussed North Korea’s real positioning behind their nuclear tests and ICBM launches.

“While Kim Jung Un may ‘appear’ to be ‘crazy,’ and he is, he does understand the consequences of starting an actual war with the U.S. However, as a dictator, he can not afford to show weakness. Therefore, he needs the U.S. to acquiesce to some degree to allow him to claim victory over the ‘evil empire’ of the west.”

Over the weekend, as per Reuters, that is exactly what happened.

“A U.S.-drafted resolution originally calling for an oil embargo on the North, a halt to its key exports of textiles and subjecting leader Kim Jong Un to a financial and travel ban have been weakened, apparently to placate Russia and China which both have veto powers, diplomats said.”

And, as I stated would be the case, the spokesman for the Democratic People Republic of Korea quickly claimed: