We still believe that US stocks are in a cyclical bull market but we have developed strategies to protect assets if stocks react too unfavourably to the growing uncertainties of reaching the debt ceiling. Strong corporate earnings and the S&P 500's rising primary trend form the basis of our belief in the cyclical bull market. Our proxy for the primary trend, the 200-day moving average, has risen more that 10% this year and has yet to show any sign of flattening out, much less reversing to the downside, as may be seen in our chart. We expect the S&P 500 will likely range in a 'decision box' between 1250 and 1365 for the next three months.

David Fuller's view Ever since the S&P 500 Index (weekly & daily) clearly became overextended relative to its 200-day moving average in February of this year, Fullermoney has talked about a corrective phase and mean reversion towards the MA. This has occurred, with support encountered near the MA in June, slightly above the March low at 1250.

Fullermoney's 'best case' scenario, often mentioned in Audios, was that the S&P 500 would stay within its medium-term upward trend defined by the MA and eventually break up out of the current trading range. Meanwhile, we regard the June and March lows as technically important.

With the S&P 500 retesting its upper boundary this month, our 'best case' scenario is still possible, not least because monetary policy remains a tailwind. However, this bullish outcome is once again jeopardised by headwinds from commodity prices, not least crude oil (Brent, weekly & daily) (WTI, weekly & daily). While commodity price inflation is exacerbated by the weak US Dollar, the real driver is demand which supply struggles to match. For nearly a decade Fullermoney has summarised this situation as: Supply Inelasticity Meets Rising Demand.

Another surge in crude oil prices would weigh on stock markets, in my view. I have previously described our 'worst case' scenario as a small bear market relative to what we saw for the S&P 500 in 2008.