Ambiguity

Unless the S&P breaks 1700.68, higher prices are expected. Yet again, a correction has failed to materialize as the patterns fade into ambiguity. Perhaps a new high and then a dip toward 1690 -- a little tough to tell for now.

The S&P is currently stalled at a Fibonacci 61.8% extension target in the middle of the confluence zone (1709-1712). The next move awaits while the internals suffer. In apples-to-apples ETF terms, financials (IYG) point higher, while JNK and HYG suggest caution versus SPY.

Of particular interest is an AP headline regarding Japan:

Japan unveils largest warship since World War II

This is more worrisome to me than a bunch of made-up news about a worldwide terror threat. Tensions are rising in Southeast Asia and we should take note. Interesting that the ship construction began in 2009. What mood might its completion date suggest?

Elsewhere, the WSJ notes that Private Equity is at it again.

Private-Equity Payout Debt Surges

"Private-equity firms are adding debt to companies they own to fund payouts to themselves at a record pace, as fears mount that the window for these deals will close if interest rates rise."

These cowboys never cease to amaze me, and neither does their behavior. Who knows if they'll be right on interest rates. But whenever they move as a herd, I take interest. They got soaked with real estate in 2007. Perhaps there is another surprise in store for interest rates.

Gold is under some pressure. 1265 would look good for a shot to the upside.