SPX, QQQ Breakout confirmed, as US Dollar breaks down Array ( [cookie] => f86c5d-635462-e667b3-573526-91ac6a [current_usage] => 2 [max_usage] => 2 [current_usage_crypto] => 0 [max_usage_crypto] => 2 [lock] => 1 [message] => [error] => [active_member] => 0 [subscriber] => 0 [role] => [visitor_id] => 40297 [reason] => [method] => ) 1 and can accesss
Short-term trends are turning bullish as SPX and QQQ have finally broken out of their respective triangle consolidation patterns, which were established roughly three months ago. The US Dollar has also broken down, while Treasury yields could trade largely range-bound in the near term as the correlation between Treasuries and Equities is partially unwound. Equal-weighted S&P 500, DJ Transportation Avg., DJIA, and Russell 2000 have not yet achieved the breakout seen in SPX and QQQ, and this likely takes some time. However, sentiment regarding tariffs and their possible negative implications for the US Stock market has gotten quite bearish for both the Equity and Bond markets in recent weeks, which arguably is a positive. While seeing a broad-based rally across Equal-weighed indices like RSP would help in having more conviction on the longevity of this rally, at present, it’s right to be long, expecting SPX to push up to 6300.
If tariffs are a problem, someone forgot to tell “Mr. Market.” The breakout in SPX and QQQ has coincided with some of the worst retail sentiment I’ve seen in over six months and gives me conviction that higher prices happen at a time when I least expect it.
Thursday’s rally occurred on roughly 3/1 breadth and 1% moves out of Discretionary, Materials, Energy, Technology, Financials, REITS, and Consumer Staples. While there could be a temporary break in the correlation between Treasuries, Bitcoin, and SPX (as near-term trends in both Treasuries and Bitcoin don’t appear as positive yet), I’d rather just trust the Equity move for now, expecting Stock indices to push up into the end of February.
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