According to the strategist, Scott Barlow (@SBarlow_ROB), the S&P 500 index and the US 10-years bonds have reached the highest correlation ever.
Central bank stimulus measures remain the key driver of stock market growth, pushing into the background all other factors, including geopolitical risks, economic problems, as well as financial results of companies and their market valuations. However, these very factors can provide a good reason for taking profit, and they became the reason for the last pullback. But, unfortunately (or luckily), the policy of central banks led to the 'separation' of stock markets from the economy.
Another key reason the bulls bought out the last drawdown is the S&P 500's proximity to an all-time high.
Indeed, from a technical point of view, the index looks very promising. It bounced off its March lows very high and strengthened with minor pullbacks. The current dynamics indicate that the bulls are in control, while the bears are trapped.
Until the index falls below 3,190 or reverses to a higher level, there is no reason to be bearish, even if the rally looks irrational from a fundamental point of view.