2nd Straight day of Negative Breadth but “Magnificent 7” saves the day Array ( [cookie] => 01223a-4913b7-755af0-0b977a-7c2c4b [current_usage] => 2 [max_usage] => 2 [current_usage_crypto] => 1 [max_usage_crypto] => 1 [lock] => 1 [message] => [error] => [active_member] => 1 [subscriber] => 0 [role] => fsi_macro [visitor_id] => 592619 [reason] => [method] => ) 1
Equity trends from August remain bullish, and SPX has neared the upper edge of its four-month channel resistance while the NASDAQ 100 index has just pushed back to new all-time highs. Treasury yields and the US Dollar have both begun to wobble lately as December has gotten underway, but their sudden trend reversals have had scant negative effects on the current appetite for US Equities. Thus far, no evidence of consolidation has played out which lines up with cycle projections and lackluster breadth since September. Overall, while Sentiment, cycles, and DeMark signals, along with lackluster Technology participation, made SPX seem like a risky bet following its 15% rally in 15 weeks from August lows, there simply hasn’t been any evidence of price weakness. As the saying goes, it remains difficult to bet against uptrends in December. While I expect some consolidation in SPX before the price gets above 6100, it could be limited to 5950 given the recent breakout in stocks like AAPL, which are important to SPX and QQQ. Thus, for those looking, the timetable for a possible near-term consolidation could happen from 12/5 into December expiration before an end-of-year rally.
Similar to yesterday, market breadth was negative while SPX and QQQ found a way to rebound back to positive territory, which marked an official new all-time high daily close for the NASDAQ 100 index and $QQQ. While nine sectors out of 11 fell to close the day negative, large-cap Technology managed to “come to the rescue” on strength out of $PLTR, $TER, $MU, $NVDA, $AAPL, and $ANET, to name a few. Each of these managed to rally more than 1%, effectively disguising the weakness of Consumer Discretionary, Financials, and Utilities, which each fell more than -0.50%.
Overall, I find the rally back to new highs certainly constructive for the US broader indices, technically speaking. However, Equal-weighted S&P 500 fell for the third day of the last four and closed at multi-day lows. Furthermore, markets have definitely begun to show more evidence of US Dollar weakness (in the form of the Japanese Yen strengthening vs. USD), and Treasury yields are beginning to back off. Furthermore, the degree of currency and Fixed income-related volatility has begun to accelerate overseas, given the possible collapse in the French government and Martial Law roller coaster out of South Korea.
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