Morning Notes — Near-Term Path

Having cleared technical resistance at ~3581, the S&P 500 should have an easier time pushing higher.  Our intermediate concern is based on extreme bullish sentiment from the AAII survey from 11/12 (second highest on record) and positioning data that suggests above-average equity weightings among CTAs, hedge funds and individuals.  None of the positioning indicators appear stretched as of yet, which helps us stay long in the near-term.  We even stay bullishly biased at technical levels above ~3400, but watching closely for any unusual internal or cross market indicators suggesting dislocation or stress.  The indicator usually occurs several days before the equity correction.  In January 2018 the indicator came when 10-year yields pushed through long-standing technical resistance at 2.62% and in January 2019 it was sector dispersion and decelerating price trend momentum.