Distribution begins, yet Technology strength helps QQQ to hold up Array ( [cookie] => 172c85-add0ff-2d399f-5b2503-285053 [current_usage] => 2 [max_usage] => 2 [current_usage_crypto] => 2 [max_usage_crypto] => 2 [lock] => 1 [message] => [error] => [active_member] => 0 [subscriber] => 0 [role] => [visitor_id] => 188391 [user_id] => [reason] => [method] => ) 1 and can accesss
Arguably, the trend for both SPX and QQQ remains bullish, while some short-term trend damage did happen with RSP and IWM, which makes these more technically negative for the days ahead. Tuesday represented a distribution day for the broader US Stock market as NYSE market breadth was negative by more than 3/1 bearish. Interest rates continued their climb, despite a better-than-expected core CPI number, and I suspect that higher long-term rates will be something the Equity market might react negatively to in the short run. However, as discussed earlier this week, SPX pullbacks, if/when they occur, likely don’t materialize into anything more than 2-3% drawdowns ahead of a rally into August. For SPX and QQQ, any daily close under 6237 or 551.63, respectively, might result in weakness into July expiration. However, trends shouldn’t experience much weakness in July before turning back higher to rally into August. As always, while today’s breadth was a negative, it’s important to see if Technology will be affected and/or lead SPX or QQQ to break down or whether the market simply undergoes internal distribution before heading higher. At present, there isn’t sufficient technical weakness to make this call.
As the chart below shows, US Equity markets (via the Equal-weighted S&P 500 ETF ($RSP) have been showing distribution since peaking on 7/10, yet it’s proven to be a rather unusual week of trading over the past five days.
Technology has managed to hold up in resilient fashion and buoy the market while the broader market has been slowly retreating.


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