The S&P 500 Cash index (SPX) attained the 945 target level in yesterday's rather frothy session. Having pierced above the 200-day EMA and the January 6 intraday high the index came to rest at 943.

The sense is that many asset allocators of the market are now pushing the limits to find where the new normal is in terms of the future economic outlook.

I still sense that there is too much optimism about assumptions for the recovery and the rate of growth which can be expected in coming years and that is why I am still far from convinced that a nascent bull market is emerging.



There is one theme which I am confident about which is that, unless we get another major leg down to the rolling financial crisis, the bull market in US Treasuries which carried from the October 1987 crash until December of 2008 is over.

Yields on the five year note saw the largest relative jump yesterday and I would expect that as long as traders in equities and commodities continue to push the reflation agenda the market's focus will move increasingly towards the shorter term securities, in particular 2-year notes.

Perversely the rates on short term bills are declining significantly at present - which I don't believe is a positive for those claiming boldly that risk aversion is behind us.



The chart below is a weekly chart for the Hang Seng Index in Hong Kong (HSI). Superimposing a fibonacci grid over the historic high from October 2007 and the most recent low it can be seen that the closing price in Tuesday’s session (which saw a 2.6% decline) is almost exactly at the 38% retracement level.

I would be very surprised to see this index slice through the 20,000 level without a corrective episode.



FXB, which allows access to sterling against the dollar via an exchange traded fund, is reaching up to levels where the reward/risks on the long side would seem to be unattractive.



One other ETF which would appear to have attained a strategic target in yesterday's trading is DBC, which tracks a broad basket of commodities.



Clive Corcoran is the publisher of TradeWithForm.com, which provides daily analysis and commentary on the US stock market.