A 'tactical' retreat has been resisted for days again; with just a brief shakeout on Davos; the Dollar's dip; and the 10 Year Treasury's spike. All these were quickly reversed, as the Indexes moved to higher highs.

We are very wary of this nearly-euphoric move by markets; but thought in the face of obvious 'justification' for a correction; that stocks would be able to repel the attacks for a bit; but not long enough to mitigate risks.

The result was our stance of not buying, but calling for no correction yet; much less a cataclysmic hit to the market. I've recently been prone to be focused on early-mid February as an interest period of vulnerability; for a shakeout or even a correction; but not necessarily all the way back to the 'mean' or Moving Average.
 

However that's pending in 2018's first half; so we should see a series of 'contested' to-and-fro moves that result in a tactical retreat by the S&P. At the same time there is so much money sloshing around and heading to the United States (the opposite view of those who demean prospects based on yield movements alone); that certain 'value' plays that remain not overpriced like the major leaders, or under-the-radar even, may find better support during the corrective phase than the half-dozen or so that really led the majority of the upside.
 

Of course many of those stocks have traded fairly narrowly for weeks as the list broadened-out somewhat, with Financials, Oils, and the old-line Industrials (including the Caterpillars of the world, as I suggested right at Election Day would benefit from the focus of rebuilding America's core infrastructure).
 

Concurrently Airlines and the Transports have been sort of giving a warning signal that everyone is ignoring..even the skeptics at this point tend to argue on euphoric buying not traditional indicators like Dow Theory, which actually are concurring with regard to growing risks.
 

In sum: there is no change in my recent view that things fight to hang in on the upside (even if within a very high level range); while the general idea of a tactical pullback in sky-high markets in February is likely. It's a bit too soon to suggest that a Spring rally follows before heavier selling; however it's something we'll gauge depending how deep a first-strike in terms of 'regression' .. towards if not to .. the Mean unfolds.