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After more than a year of ups and downs, which some contend included a "mini" or cyclical bear market, the S&P 500 finally returned to The Promised Land yesterday with a new all-time closing high. To be sure, there were no fireworks on display as the venerable index closed well off the intraday high and was hit with steady selling over the last hour. But, as they say, a win is a win, right? From a big-picture standpoint, it is important to remember that all three of our models designed to "call" the type of trading environment are still unanimous in the view that this remains a mean reverting market. And given the fact that every breakout since early 2015 has ultimately become a "fake out," please forgive me if I keep the champagne on ice for a while here.

This morning, global markets are moving up a bit on the back of some political stability in Britain, as Theresa May is slated to become the next PM, and former Fed Chairman Ben Bernanke's meeting with Japanese PM Shinzo Abe in Tokyo is lending credence to the idea of more stimulus in the wings there. And with Alcoa (NYSE: AA) having started off the quarterly earnings parade on an upbeat note, the positive vibe in the markets looks like it will continue.

For me, the question of the day, of course, is when the bears are going to mount their next offensive and try to push the major indices right back into the recent range? Thus, I'll be watching closely for signs of internal momentum and plan to stay patient in terms of making any major adjustments.

S&P 500 - Daily

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Current Market Drivers

We strive to identify the driving forces behind the market action on a daily basis. The thinking is that if we can both identify and understand why stocks are doing what they are doing on a short-term basis; we are not likely to be surprised/blind-sided by a big move. Listed below are what we believe to be the driving forces of the current market (Listed in order of importance).

      1. The State of Global Central Bank Policies
      2. The State of U.S. Economic Growth
      3. The State of the Earnings Season
      4. The State of the Stock Market Valuations

Thought For The Day:

"You can't pay back - you can only pay forward." --Woody Hayes

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Here's wishing you green screens and all the best for a great day,

David D. Moenning
Founder: Heritage Capital Research
Chief Investment Officer: Sowell Management Services

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