The Standard & Poor’s 500 index (SPX) rebounded from its rising 50-dma this week, after a selloff the previous week. This was an almost textbook perfect picture of how markets react in a bull market. “What’s next?” is the question most clients are asking the past few days. Despite the whip-saw volatility over the past four weeks, the technical backdrop has not changed materially.

Weekly indicators, tracking 1-2 quarter shifts, continue to incrementally turn down from overbought levels that developed in early 1Q, and are unlikely to bottom until well into 2Q.

Consequently, I continue to expect markets to remain in a choppy trading range over the coming 2-4 months which I’m expecting will present better opportunities to redeploy capital. For fully invested investors with flexibility to be tactical, I continue to recommend rotating capital from well advanced leaders to more defensive groups and stocks.

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This week’s chart is of Constellation Brands (STZ) which appears to be in the early stages of bottoming at long-term support around its 200-week simple moving average (SMA). In contrast to the high momentum, high P/E technology leaders that are now well above their 200-day moving averages, STZ has spent the bulk of 2019 consol...

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