Short-term trends in US Equities remain bullish, and SPX has now turned positive for the year after having risen over 1000 points off the 4/7/25 lows, or nearly 21% gains from 4835 in 25 trading days. (nearly 1% a day) Despite having entered a price zone where reversals “could” happen, the price has not given any indication of a pullback being imminent. Meanwhile, “Safe-haven” trades like Gold, Treasuries, Japanese Yen, and/or Swiss Franc have all steadily weakened given the signs of tariff and geopolitical risk de-escalation in the last week. Overall, it will be important to watch out for any evidence of breadth starting to dry up on this rally, and/or signs of US Equity indices starting to reverse course following May expiration. While I expect that the road likely gets a bit tougher from here over the next month, it’s hard to fade rallies that haven’t begun to show much signs of fatigue. There could be some sign of this starting early next week, but at present, it looks wise to stick with this new uptrend vs. looking to fade recent gains.
Trends for US Equity indices have continued to improve, and SPX’s strength has helped momentum begin to turn more positive on an intermediate-term basis, with weekly MACD having officially achieved a bullish crossover for QQQ (should do so within the next week for SPX).
Breadth has also lifted meaningfully on an intermediate-term basis, with nearly 50% of all SPX names back above their respective 200-day moving averages.
However, the most important point to mention after a 20% rally in a bit more than a month is that many people still don’t have the conviction that this move is sustainable. Hedge fund data, along with CTA exposure, still shows not nearly as much bullish sentiment as might be expected after such a move. My own experience with many investors whom I’ve spoken to in the last week is that many continue to ask when the market peak will be on this rally.
I myself do not view a V-shaped move back to new highs as being a base case scenario. Yet volume remains elevated on price strength this week, and participation on Tuesday, albeit less than Monday, remains bullish and still shows 2/1 bullish Advance/Decline activity.
Overall, while there has been some minor breadth divergences in the last week on this SPX rally, there hasn’t been meaningful evidence of trend reversal that would warrant paying attention to.
The following are things investors should be paying attention to that might have importance in signaling at least a minor market peak:
- Signs of the 9-day moving average being broken, which is upward sloping. This lies at SPX-5692 as of 5/13/25 and lies right near the current uptrend line from April 7th. (Some might wish to use a shorter-term 5-day moving average, which lies at 5737)
- Traders should await signs of the actual uptrend from 4/7/25 being violated, which connects 4/21/25 lows and is near the early May lows. (This is also near the 9-day m.a.)
- Evidence of a TD Combo “13 Exhaustion” signal might be important. As I discussed in recent days, this would have more relevance on a daily basis than a TD Sell Setup on a daily basis in the absence of any 240-minute signals, nor weekly signals being present. These look to be 4-5 days away, potentially.
- Signs of key Technology stocks like AAPL 0.81% or NVDA 5.28% , which make up significant parts of SPX, are showing signs of reversing course. As of Tuesday’s close (5/13/25), these both closed at/near their highs of the session and showed no evidence of counter-trend exhaustion.
- Cycles related to the 2/19/25 former peak are starting to turn back lower. At present, early next week does have some minor short-term importance as mentioned yesterday, being 90 calendar days from a prominent peak from three months ago. (5/19-5/20)
- Evidence of breadth starting to dry up. (Note, despite Monday’s strong breadth surge, some breadth gauges are lower now than back on 5/2/25) However, seeing evidence of negative breadth over the next week, where more Declining issues are present vs. Advancing issues, or a negative A/D ratio in volume would also raise suspicion.
- Signs of actual reversals to close at/near lows of the session after early gains, with a move to new multi-day lows having particular importance as a market negative.
- Low Equity Put/call signals approaching could have importance, or a very low TRIN reading (ARMS index) Following a big rally like what’s happened since 4/7/25, seeing evidence of investors suddenly reaching for call options would have importance.
Overall, few, if any of these points above are in place, outside of some minor breadth divergence when eyeing a 10-day moving average of Advance/Decline data on SPX, which is fractionally lower than back on 5/2/25. However, it’s normally wise to await the actual reversal in price itself, which at present, remains premature.
S&P 500 Index
Healthcare weakness/underperformance could last a bit longer
Given the massive undertaking to cut Drug prices, we’ve seen substantial deterioration in recent days across much of the Healthcare space.
Using XLV -3.08% as a gauge, (SPDR Healthcare Sector ETF) it looks likely that more weakness might be forthcoming in the days/weeks ahead. Weekly MACD has recently turned negative, which is a bearish development.
The drop to new multi-day lows, under last week’s lows, should result in April lows being challenged. However, I suspect this will be undercut and XLV might weaken down to the mid-$120s (near $125).
Such a move would help XLV test the area near its intermediate-term trendline support, connecting a support trendline from 2022. At present, buying dips in Healthcare looks early.
S&P 500 Healthcare Sector SPDR – XLV
Equal-weighted Healthcare has dropped to new lows vs. Equal-weighted S&P 500
To add to prior negative comments, Healthcare has just dropped to new lows for the year vs. S&P 500.
This isn’t good news for Healthcare fans, as the ratio of Invesco’s Equal-weighted Healthcare ETF (RSPH -1.95% ) vs. Invesco’s Equal-weighted S&P 500 ETF (RSP -0.06% ) has just undercut lows from last Fall, 2025.
Interestingly enough, DeMark counts suggest that a possible inflection point “might” occur within 3-4 weeks if TD signals show exhaustion on this weakness. This points to a possible further period of underperformance until June.
I suspect that Healthcare likely weakens into early to mid-June technically, as that’s the most likely time when relative charts of both Cap-weighted and also Equal-weighted basis vs. SPX could bottom out, based on my analysis.
At present, it remains premature to overweight this group, and I recently downgraded Healthcare, technically, a couple of weeks ago.
RSPH/RSP
Crude oil looks to be close to resistance after this bounce
As shown below, WTI Crude oil experienced a rally given that the trade negotiations have made progress in the last week. WTI Crude moved from the mid-$50s to the mid-$60s.
While some investors might be betting on a rebound, I find this premature based on price action in the Energy sector, in WTI Crude and based on Crude’s composite cycle, which shows weakness into June.
Overall, I suspect that Crude peaks out in the next week and begins a decline down to test and undercut lows. This might represent the final decline for WTI Crude this year, as Cycles suggest that mid-June has possible importance for an inflection point.
However, the next month could be dismal for Energy investors, and it looks right technically to hold off on growing too enthusiastic given the bounce in the last few weeks.
Technically, price needs to get above $66 at a minimum in front-month WTI Crude futures to improve this trend, which looks unlikely. Moreover, a break of the downtrend from February would have importance, but also looks premature.
Light Crude Oil Futures
