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For a short week, it was a lot of action in the S&P 500. The index opened the week below short-term support. However, after the break of support, there was no follow through. So, what we have is a failed bear breakout. The difference between this week and the prior is that the S&P 500 finished this past week at the top of the trading range and last week it finished in the middle. This gives hope to the bulls as much isn’t needed for them to break to the upside.
On the shorter term, the advantage seems to be to the bulls, but they are certainly not leading with authority. When it comes to the longer-term look of the US equity markets, momentum finished May in the positive as well as many other factors. This gives the Bear ‘o’ Meter a positive reading and therefore, a risk on stance.
The swing indexes we like are the following: United Kingdom / Japan / Extended Treasury / Australia / Brazil / EAFE Value / Global Wind Energy / Healthcare Sector
It was not a great week for most international markets. Most of them traded down early in the week and finished the week higher. The difference between the US markets and a lot of the international markets is that the US equities markets are trading on highs or at the top of their trading ranges and many of the international equities markets are trading at the bottom of their trading ranges. This makes broad US equities stronger than the broad international equities markets.
We are not absolutely excited about getting involved in anything this week. Many international equities markets did signal buy signals last week at the bottom of the trading range, but we want to focus on US equities for the time being. It is good for the US markets that small caps continue to make new highs as some of the sectors. As it stands right now, the winners are pulling the losers up. We will be watching to see if they can continue to do so.
The Education/Gratitude Book Club
June is upon us and it is time for a new book. I still have to catch up a little from May’s book, but I think June’s will be a quick read. The book for this month is “Habit Stacking: 127 Small Changes to Improve Your Health, Wealth, and Happiness (Most are Five Minutes or Less)” by S.J. Scott. Have a great week!
Adam Straseske, CMT