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. (I don’t sense that today, Wednesday, 5/14/25, provided that proof.) 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.
While Wednesday showed some negative breadth, with nearly all the sectors lower on the day outside of Technology and large-cap Consumer Discretionary, there wasn’t sufficient weakness to argue for any kind of trend reversal.
Stocks like TSLA 6.80% , NVDA 2.29% , MSFT 0.40% , PLTR 5.27% have all been strengthening meaningfully in recent weeks, and counter-trend signs of exhaustion (a.k.a. Sell signals) remain premature. Thus, while the move in Healthcare does indeed look poor in the short run and could present a minor headwind to SPX at some point, given its representation within SPX, there hasn’t been sufficient evidence of Financials, Industrials, Discretionary, and most importantly, Technology, reversing course.
I’ll monitor markets heading into next week, but sense that any minor weakness initially won’t be too important given that many of the timing mechanisms I employ remain early to be triggered.
Initially, if one looks at charts of the equal-weighted SPX, it indeed does appear to be at important levels. Moreover, I had mentioned that 5900 might pose some resistance given the positive gamma situation heading into May expiration.
However, the bottom line is that Technology continues to rule the markets. Barring meaningful evidence of many of the leading Tech stocks turning lower, I suspect that a further leg up in this market is indeed possible.
If/when DeMark-related exhaustion tools start to trigger meaningful evidence of a possible reversal across multiple timeframes and multiple asset classes, or we see actual trend violation in SPX and other indices, then it might be right to pay attention. For now, much more is needed.
Invesco S&P 500 Equal Weight ETF
I’ll repeat last night’s comments below for emphasis, along with including the list of factors I’m watching technically that might have some importance in causing a minor reversal in Stock indices.
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 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 who I’ve spoken to in the last week is that many continue to ask when the market peak will be on this rally.
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 1.68% or NVDA 2.29% , 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.
Healthcare weakness reinforces my recent message about possible underperformance
I’ll refrain from repeating last night’s comments on Healthcare but would encourage those who missed last night’s report to review that material.
Today’s important chart for the Healthcare sector involves the Equal-weighted Healthcare sector ETF (RSPH 0.98% ) which violated a minor three-week uptrend in Wednesday’s session.
As can be seen, this bounced to nearly the exact level it needed to before stalling and reversing. Stocks like ABBV -2.87% , MRNA 1.85% , TMO -0.24% , BMY 3.26% , WST 1.08% , LLY 0.41% all weakened, and there remains outsized weakness in stocks like UNH -0.29% .
Overall, it’s arguably wise to hold off on buying dips in Healthcare right away. Meaningful underperformance in June certainly could serve as a drag on market breadth, similar to what happened in late 2024. However, for now, with Technology having reasserted its dominance of late, it still looks right to trust the market, regardless of the near-term lagging tendencies of this group.
Invesco S&P 500 Equal Weight Health Care ETF
TLT looks ripe to turn higher by early next week, while TNX likely does not exceed 4.66
Treasuries are getting close to turning back higher at a time when many investors remain concerned about the recent spike in yields affecting Equity returns.
TLT looks to be 2-3 days away from bottoming out, and I like owning TLT here following its pullback from the mid-$90s and feel like $84-$85 is an attractive area for this to find support.
TNX also should not climb above 4.66% in this scenario and also looks close to peaking out in US 10-Year Treasury yields.
While yields have spiked as Stocks have risen, I suspect that stocks will begin to show more positive correlation with Treasuries in the near future, and both can rise in unison (stocks rising as yields fall).
20+ Year Treas Bond Ishares ETF – TLT
Gold is getting closer to support; Bottom likely around 3100-3130
Gold, Silver, and the Japanese Yen have all retreated similar to Treasuries as stocks have rallied in recent weeks, and all look to be close to turning back higher.
Gold, as shown below on daily charts, looks to have strong trendline support near $3100, which should provide some attractive risk/reward support before this pushes higher.
Gold miners and Silver miners also should be closing in on support and I feel that both of these are excellent risk/rewards for investors with a 3-5 month timeframe or longer.
Silver should eventually begin to play catch-up with Gold as it enters its own bullish cycle starting next month, which might last one year. For now, Silver will likely take time in recouping some of its relative weakness.
At present, Gold looks to be the preferred choice for investors who are looking for alternatives following this sharp run-up in Technology stocks. I like buying/owning Gold at $3100-$3130 as an ideal risk/reward area for a push up to $3800 in the months ahead.
CFDs on Gold (USS / OZ)
