For all the negative nancies, and all the expectations of a poor economy, there is one fact that can not be ignored: unemployment is now at 8.8%.
Regardless of any one's opinion of what the 8.8% actually means, the powers that be pay attention to that number. It is a symptom toward the health of the American economy. It is merely confirming what the data has been telling us all along.
I believe the American economy is strong and in good shape. The past two weeks proved to the world the global economy is extremely resilient, and in far better shape than the many think. Through all the natural disasters and social unrest, I have been assessing the potential weaknesses and the market thus far is proving me correct. (The global economy can handle these issues.)
We find ourselves in a precarious position. There is no 'black swan' to worry about. If the economies are humming along, and black swans will not act as correction mechanism to the market, what is there to be concerned about?
The Fed raising rates.
Although as a technician, I also concern myself with overbought conditions, fundamentally, these are the kind of conditions the Fed will act to be responsible. I do not know when the Fed will act, but there has been too much chatter by multiple Fed governors over the past two weeks to ignore this risk.
I am anticipating a 50 to 75 basis point move, because that is how much strength I think the economy has, but I do not know when. (Frankly, I do not know why they are still in acting on QE2.)
Technically, we are at the top end of what I think is the channel range while being overbought. I am still protected, and will look to cover that protection below 1320.