SPY is forming a wedge, could go higher. Target $220 by May 2015
On technical side, SPY is forming a wedge and could go higher after the wedge breaks up. The upper bound trend line has been tested many times since 2009. The monthly chart is still healthy, all the Moving Averages are trending up and parallel to each other. So we could still see some continuation in the up move.
On fundamental side, US economy has been waking up. The expectation of quarterly GDP growth rate has been increasing since 2014. Unemployment situation is getting better. Fed exited QE based on the recent healthy growth of economy. The macro data of the last quarter is doing well. The expectation of GDP growth rate increased to 5 year high and the real number exceeded the expectation. The sector rotation right now shows the "safe harbor sectors" such as utilities are hot. Usually when these sectors becoming hot, the market is going towards it's potential peak. But right now it's still not there yet, at least SPY hasn't yet given us any signal that it's reaching peak. We could still see some continuation of up trend. Fed is expected to announce raising interest rate in May 2015, which is detrimental to the market. So the timing of my measure move points to May 2015 as the end of the coming round of rally. The expectation is about to digest by the market then.
On fundamental side, US economy has been waking up. The expectation of quarterly GDP growth rate has been increasing since 2014. Unemployment situation is getting better. Fed exited QE based on the recent healthy growth of economy. The macro data of the last quarter is doing well. The expectation of GDP growth rate increased to 5 year high and the real number exceeded the expectation. The sector rotation right now shows the "safe harbor sectors" such as utilities are hot. Usually when these sectors becoming hot, the market is going towards it's potential peak. But right now it's still not there yet, at least SPY hasn't yet given us any signal that it's reaching peak. We could still see some continuation of up trend. Fed is expected to announce raising interest rate in May 2015, which is detrimental to the market. So the timing of my measure move points to May 2015 as the end of the coming round of rally. The expectation is about to digest by the market then.
