The S&P 500 and Nasdaq hurdled over their 200-Day Moving Averages, reclaiming positive territory on the year, backed by strong internals and improving economic sentiment. Moody’s downgraded the US credit rating on Friday, which could have reverberations in the market next week.
Risk On
- The major indexes were up between 3-7%, with 3 of the 4 back to positive on the year, and conditions still not showing overbought. (+)
- Volume patterns wre strong, confirming the market price action. (+)
- All sectors were up on the week with the exception of Gold Miners. Semiconductors led, up to +10%, along with retail and transportation. (+)
- Risk-off plays like Gold and Gold Miners were down on the week 2with a significant divergence from the indexes. (+)
- The cumulative advance-decline confirmed price action. The McClellan Oscilator is showing some divergence from its mid-April peak, which should be watched closely. (+)
- The 52-Week New High New Low ratio continues to improve with everything stacked and sloped and seemingly more upside above. (+)
- The color charts (moving average of the number of stocks above key moving averages ) are extremely bullish, but hitting some of the most extreme levels of participation we have seen in years. (+)
- Risk gauges continue to be full risk-on. (+)
- The percentage of stocks above key moving averages is positively stacked and sloped and seeing the number of stocks above their 200-Day Moving Average exceeding 50%. (+)
- Growth stocks continue to lead on a short and longer-term basis. (+)
- Four of the six Modern Family members regained their 200-Day Moving Average. Retail had a big improvement and is now outperforming the SPY . Biotech continues to be weighed down, possibly over political considerations. (+)
- Foreign equities are still acting strong, though the U.S. benchmark has regained leadership on a short-term basis. (+)
- Bitcoin has been compressing the last two weeks in a tight range, looking like it could break out to new highs, assuming it can hold its 10-Day Moving Average. (+)
- This period tends to be strong seasonally, especially semiconductors. (+)
- Soft commodities, copper , gold, all lost leadership with inflationary pressures abating. (+)
Neutral
- The cash VIX has hit bullish levels with volatility coming off, though short-term futures remain elevated. (=)
- Gold backed off its recent highs, though the trend remains intact and may have found some support at its 50 Day Moving Average. (=)
- Rates maintained their recent trading range. It is yet to be seen how the Fed may respond to some easing of inflationary pressures. (=)
- Modern Family read is mixed as several members are still under 200 DMA