Chinese Equities appear more bullish after M1 gains

Near-term and intermediate-term technical trends remain bullish for US Equities, but it’s thought that the rally in US Stocks likely will face some meaningful resistance at marginally higher levels, which might begin sometime next week, before August 20th. SPX has now officially joined QQQ at new all-time highs and might scale up to 6550 before making some kind of peak near resistance.   Equal-weighted SPX and DJIA have not yet hit new all-time highs, but look poised to challenge these levels into next week.  Overall, despite some of the minor concerns regarding Elliott-wave patterns nearing completion, seasonal/cyclical periods of weakness approaching and waning breadth, it’s going to be necessary to see evidence of US Equity index prices turning down in a manner that would help to add conviction to these concerns. Overall, while it’s proper not to grow too complacent in August, it’s also proper to let this rally run its course until the market demonstrates evidence of starting to weaken.  For now, it still appears that the path of least resistance remains higher.

Despite some minor rotation out of Momentum stocks on Wednesday and into Small-caps, along with some evidence of “Non-profitable Technology” (Low-Quality) names gaining ground, there’s no real evidence of markets peaking. Overall, the rally remains intact and likely pushes above 6500 in the days ahead. 

This daily chart showed some minor stalling into mid-day Wednesday before rallying to close out the session with mild gains in $SPX and fractional losses in $QQQ. However, Small-caps are continuing to gain ground and have shown a noticeable uptick in momentum following the SOFR market pricing in a near-certain 25 bp. rate cut in the Funds rate at the September meeting. 

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