Stock Market Update - Markets Break Out

Just a couple days ago, we warned that a triangle pattern was forming and that markets could break up or down. Today they clearly broke though trendline resistance that dates back to late January (see chart).

While this is a significant breakout pattern and one that could lead us to NEW MARKET HIGHS, it is important to understand that we are very cautious when it comes to bullish moves in this market. There are many reasons why we are cautious to the upside. Geopolitical uncertainty is growing as we've covered in previous updates. Defaults are on the rise. By almost every measure, we now have a larger credit bubble than we did leading up to 2008. In other words, almost all of the market recovery has been fueled by central banking stimulus - i.e. inflation. Can the markets go higher the face of rising defaults and global risk??? Yes - absolutely. But if they do, know it will be driven by central bank monetary debasement in the form of "stimulus" which continues to this very day.

As we stated in our last update, regardless of the breakout in either direction, we now need to see HIGHER LOWS to be bullish on this market. Otherwise this could be a classic BULL TRAP in the making.

Act accordingly,

The Market Vigilante