SPX poised to lift to 6160-6182 despite poor breadth

Note: Due to travel commitments, there will be no daily technical strategy video this evening.

Markets remain quite choppy, with SPX largely range-bound over the last eight trading sessions as part of an ongoing bullish uptrend. Despite ongoing deteriorating breadth issues, I expect this recent consolidation to be resolved higher initially, but it remains important for markets to demonstrate some above-average sector participation after the FOMC meeting, given how weak the near-term underperformance has proven to be in many sectors. Despite the counter-trend bounce underway in both TNX as well as DXY, it’s unlikely that mid-November peaks are exceeded before the recent downturn follows through further to finish the year trending down. Overall, I don’t think the breadth of weakness matters just yet to the US stock market. Technology has successfully managed to turn higher in a way that’s been helpful to the market indices, despite underperformance in many various sectors. Near-term, this looks to continue.

SPX has now faced one of the largest periods of consecutive negative breadth in over 20 years, as the latest reading of more Decliners to Advancing issues brings this number to 12, only surpassed in 2001.

In the short run, SPX has largely avoided turning down specifically given Technology’s outsized strength and comeback in recent weeks.  I expect that this recent range between 6035-6085 should lead to a pushback to new highs into year-end.

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