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SPX, DJIA, Russell 2000, Dow Jones Transportation Average, and the Equal-weighted S&P 500 have all joined QQQ in breaking downtrends from late July peaks.   NYSE breadth expanded to over 9/1 positive, making this a difficult bounce to fade right away.  However, neither Treasury yields, nor the US Dollar have achieved larger breakdowns in existing uptrends.   Overall, Tuesday’s post CPI gains certainly were a technical positive, but don’t necessarily indicate an uninterrupted move back to new high territory.

Bottom line, US equity rally could possibly extend into early next week given the recent breadth expansion.  However, short-term overbought conditions as part of a negative momentum trend on weekly and monthly charts suggest rallies into next week would likely arrive at strong resistance.  The short-term risk/reward for US Equities won’t be as positive following any further rally into next week.

In the near-term, (meaning the next 3-5 trading days) seeing Small-caps, Financials, Homebuilders, Transportation along with most of Consumer Discretionary show above-average strength on good market breadth is definitely a technical positive in the short run.

However, it remains Technology th...

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