Rally to SPX 5521, QQQ 482 looks possible ahead of Stallout

S&P and QQQ remain pointed higher, and despite being mildly overbought, should still be able to push fractionally higher into early next week ahead of a possible short-term top.  Treasury yields look to have followed through on the early weakness seen on Wednesday, and it’s thought that a falling US Dollar and Yield scenario generally should be supportive for risk assets into the Fall.   However,  given that more than half of S&P’s major 11 sectors have been lower over the last three months, it’s not incorrect to say that Technology domination has camouflaged the market from the skittishness being seen in many sectors.  Near-term, a run-up into next week might pave the way for a minor stalling out in Technology.  However, it’s expected that weakness in the back half of June should prove short-lived and make SPX attractive for further gains into August.

As I’ve mentioned repeatedly in recent weeks, this Equity surge has proven impressive, but much of the credit goes to Technology and Technology alone, while many other sectors have not only failed to participate, but in some cases have declined.

In Equal-weighted terms, 7 of the 11 sectors that represent the S&P 500 were down over the last month and six of those have been negative on a 3-month basis.  This is quite unusual given that SPX and QQQ have pushed back to new all-time highs in resilient fashion.  On a cap-weighted basis, when examining the Sector SPDR ETF’s, that number is five sectors on both a 1 and 3 month basis which have shown negative returns:   REITS, Consumer Discretionary, Healthcare, Materials, and Financials.

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