Defensives finally strengthening as key Cycle date nears

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Markets have entered a window for potential short-term trend change, but do not expect much selling until August.  Near-term, an SPX-4500-4600 range might hold into last couple days of July before weakening down to 4350-4400 into mid-August before rally continues

US Equity markets showed some of the biggest signs of weakness in Technology in recent weeks, while most of the Defensive sectors strengthened (and in some cases, broke out)

Trends have not yet been broken, but QQQ has taken the lead in turning down, and has quickly neared the first area of potential support ( On a 2-3 day basis)

Of the 10 warning signs I typically look for to anticipate a possible market correction, about six of these are now intact (See my 2H 2023 Outlook for more details)

Specifically, the following are problematic and normally signal a pullback is near: 

Breadth and momentum divergence on hourly and daily charts DeMark exhaustion on multiple timeframes and on multiple benchmark indices Exiting a bullish seasonal time and entering a bearish one (Both Aug and Sept ) “Short-term” individual investor sentiment gauges have entered extreme bullish territory Cycles show weakness in August Defensive trading looks to be coming back with a vengea...
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