Aerospace/Defense nears breakout while Energy picking up steam

The near-term technical structure has worsened a bit this week with the break of 4100.  While I ultimately expect any further pullback to prove mild and not undercut 3885 before turning back up to 4250 and higher, one can’t rule out more weakness based on this week’s decline. 

I expect this to prove to be minor rotation out of some of this year’s strongest outperformers thus far, like Communication Services, Consumer Discretionary, and REITS while Energy and Healthcare start to gain ground. 

SPX structure looks to have carved out a simple Elliott-wave style ABC decline on hourly charts, as shown below.  However, it’s still difficult to know whether a second ABC will now unfold which could create volatility into/after next week’s CPI report. 

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