Healthcare, Financials & Industrials comeback has been constructive Array ( [cookie] => 88f86a-bc2148-6126f9-f188f7-b09cf2 [current_usage] => 2 [max_usage] => 2 [current_usage_crypto] => 2 [max_usage_crypto] => 2 [lock] => 1 [message] => [error] => [active_member] => 1 [subscriber] => 0 [role] => fsi_pro [visitor_id] => 556868 [reason] => [method] => ) 1
SPX’s technical trend, breadth, and momentum began to turn more bullish late last week, and the move above SPX 6021 suggests a likely push to much higher levels into mid-February. Technically, short-term trends (between now and the end of January) likely will require consolidation ahead of a move back to new all-time highs, but Tuesday brought about zero evidence of any reversal of trend based on the close near the highs of the session. Given that Treasury yields and the US Dollar look to be near short-term support, and recent declines in both coincided with Equity strength, I expect that any backing and filling in the decline of both DXY and TNX (meaning rallies in both in the next week) also could temporarily result in Equities also showing some consolidation. For now, the rebound in Healthcare, Financials, and Industrials looks particularly important as positives that should carry SPX higher over the next 3-5 weeks. While the risk/reward doesn’t look as appealing between now and the end of the month, any ability to consolidate 38-50% of the rally that began last week should put the SPX in a very favorable risk/reward position.
Overall, Tuesday’s SPX close was certainly bullish, managing to exceed 6021 by the end of the day on the positive market breadth of roughly 5/1. Tuesday failed to show any stalling out in the trend from 1/13 lows, and it’s fair to say that shorter-term trends, breadth, and momentum have begun to turn more bullish in the last two trading sessions.
The flip side to all this, in my view, remains a short-term concern only. Momentum has begun to grow quite overbought on hourly charts and 240-minute charts of SPY show TD Sell setups. Furthermore, QQQ, along with the S&P Equal-weighted ETF ($RSP) remain near a 61.8% Fibonacci retracement level and stocks like AAPL have been continuing to weaken in the short run.
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