This week marks the sixth anniversary of the bull market. On March 9, 2009, the S&P 500 reached 667 (intraday). As in Warren Buffett's long-standing aphorism, it was time to buy--blood was in the streets. Investors believed that the world was ending. That the market was heading for zero. Only then, at the nadir despair, did the market begin its historic climb to heights theretofore unreached. Since, it has climbed 325 percent.
Can markets go higher?
Depending on the day and the voice, you'll find a myriad of opinions foretelling the market's eventual collapse. Or its inevitable rise. Or its predestined sideways trend. In other words, nobody knows. Of one thing of which we're certain: investors are nervous about the Fed's future rate hikes. Yet, central banks the world over continue to flood the global financial system with liquidity on an increasing number of quantitative easing programs. Last week, China, India and Poland cut rates. While the ECB announced the beginning of QE. 
 
Who can honestly say there's not some wind in our sails?  Even as we prepare to gradually bump rates higher, many have just begun to cut.
 
Last week underscored this central theme: everything market-related is being viewed through the lens of Fed policy. Only a matter of time till Yellen & Co. have a reality TV program. The Real Central Bankers of D.C.? Not different than Bravo's versions. Loads of liquidity and implants. Lot's of lengthy proclamations. None of which makes much sense.
 
Last week's weak economic data had little impact on markets. Yet it was the strong jobs report that, despite some weak spots, was positive enough to spark speculation over rate hikes. Concomitant with Friday's market plunge.
 
Helping matters lately has been the continuing deal flow as "real money" buyers use cash reserves and inflated stock prices to purchase other companies. There was $108 billion involved in 26 deals just last week. ISI totals 761 deals worth $4.4 trillion. Real money there, gang. And the more shares are sucked from the market? The better it is for the ones you own.
 
The Good
The ISM services index was 57.1, slightly better than expected... China's non-manufacturing PMI rebounded slightly... The unemployment situation improved...
 
The Bad
The ISM manufacturing index fell to 52.9, slightly below expectations... Auto sales, particularly those from Ford, were disappointing... FactSet reported further year-over-year declines in earnings expectations the first half of 2015... Short-term leading indicators weakened... While the unemployment rate dropped, the number of jobless claims rose last week to 320k...
 
The Bottom Line
Bulls and bears are engaged in an epic slugfest. While bulls hit an all-time high two weeks ago, they couldn't sustain the trend amid overbought conditions and mixed economic data. Consequently, we find ourselves in a sideways pullback. One that will likely follow the S&P 500's multi-year pattern of dropping to its 125-day moving average. Which would drag markets down to the 2030 level -- 20 points below where we stand today.
 
Volatility is back. In fact, we're capturing some of that via options plays on the VIX. While rate-hike fears will keep animal spirits down, bulls still have the wind in their sails. Global monetary policies remain stimulative. Recession potential remains distant. M&A activities have removed a sliver of equity from the public market inventory. And investors are anything but exuberant. Thought market valuations remain high, the global QE tide will likely lift all boats. So, while we expect volatility, the upward trend line remains intact.