Sequential breakaway moves by the S&P 500 must be respected, while they are also (on-top of high valuation levels) a blow-off completion move capable of occurring. With the market advancing above the 'pivot' level we'd outlined there's no disappointment, there's just a sober view of what this is, and what this is not.

What this is clearly, is a higher high for the NASDAQ, and a comparable or catch-up kind of move by the S&P and the Dow Industrial Average. Now this becomes technically overbought once again, even as it can move higher 'if' things continue to fall inline. That was the near-term point last week. And it's getting both optimistic and worrisome attention from various viewpoints.

What this is not, is some sort of 'all-clear' to invest in the market. Over time it is reasonable to expect better times or (ideally) some of the promise voted for to actually become implemented and reflected in corporate profits as well as better household income levels. So far that's mostly in 'guidance' raised by a few companies, not reflected in personal financial improvements other than in financial assets (and overpriced housing) of course.

And the latter relates to the almost-surprising continued increases in median house prices (while trumpeted on highest-ends in the most extended market enclaves like South Florida, New York City or upscale parts of Los Angeles); while 'Consumer Confidence' (via the Conference Board) just turned south, from high levels, so it may be tentative. What we need is follow-through in fundamentals. And you do have 'some' of that ongoing or pending. As to all the publicity about uber-expensive Beverly Hills and Bel Air homes; that's a form of entertainment that has nothing to do with family buying capabilities and everything to do with buyers coming from New York to California, or of course those who are truly rich or made fortunes in corporate activities.

(One thing I lament viewing the very street where I actually offered once on a Hillcrest home (in the Trousdale Estates part of Beverly Hills) and it wasn't accepted though near the asking price (back then $140,000; believe it or not .. oh well; we all probably have a few stories like that, including my NYC co-op..hah). So, after decades of life it's easy to see missed opportunities.) 

Overall politics, and even geopolitics, continue to be in-play. Domestically, a tax-package that's fully embracing the rhetoric (and not severely trimmed by Committee) will be hard to pass in this Congress, where Republicans worry about bloating the deficit, more so than cutting taxes. And if it really favors business over individual taxpayers; there will be another row over that.

One thing you won't hear; is the fairly widely-applied concept of a tax-filing approach like Great Britain or a few other countries use; where Government sends you a proposed tax (after all they have all the 1099's and so on; why do we need to repeat entering them as line-items), and you carefully review and adjust for any other deductions; and then file. Of course tax-preparers (lobbies) having opposed this for years, as that industry protects it's 'tax-tail'.

I realize any business or Sub-S Corp. might need to have professional CPA or other tax preparation; but for average citizens it could be simplified. And while this has zero impact on tax rates, just an example of what would really reform the system. And something you won't hear about in a tax-plan that's coming within hours from Washington. I'm just making an observation about what 'reform' could really be like; rather than merely tax-rate changes.

Finally, tonight there is scuttlebutt that the President wants a 10% tax on all US company foreign earnings. That's probably a non-starter as many would be subject to double taxation where the end-user is in the foreign country. It will be interesting to see how this is dealt with however.

Bottom-line:

Everyone talks about further upside or disastrous downside. It is probable that neither extreme occurs; without some catalyst. Another way this might not go (beyond initial knee-jerks) is 'buy the rumor / sell the news' on the tax-plan announcement. Whether it's based on disappointment or not the prospect is many will short it, and after a drop it will run-them-in, almost regardless of the substance in the proposal or lack of it (capital repatriation is of course the key to bringing corporate monies offshore back to the US).

In-sum: the market is eviscerating short-sellers and dragging-in (suspected) flight-safety money into both Treasuries and equities (likely Index funds for the most part) and some of that may be coming from Asia again (nervous about the North Korean situation turning-into crisis), but less so Europe, as it is increasingly relieved and confident about its economic future, if not that comfortable with societal and migration disruptions (nothing like last year).

Technically: both a breakout that's sustainable and one that's temporary at this point, will look like another leg-up. Keep an eye on breadth not just the Averages, and note that a high-volume rush can become a buying climax in the course of this. Ideally the June S&P would exceed the old highs or even 2400; so that it duplicates what some measures already suggest.

But that's not saying there's much justification for buying as broadening-out of interest into lower priced stocks often implies loss of attractiveness to the mainline (like the FANG) stocks that helped the market get to these levels. I have no change in our view so will be gunning for at least a short-term peak but so far remain unwilling to do any shorting pending how markets react to the tax-proposal, and perhaps the 'broadly ignored' Senate gathering at the White House with the President, presumed to focus on Asia's war-clouds.