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The bulls continued advancing the S&P 500 higher this past week. By the close on Friday, the S&P 500 was up 1.62% for the week. The S&P 500 broke the upside of the tight trading range from the past three weeks and has advanced into the next area of resistance. The bulls have some work to do this week, but it is good for them that we are pretty close to March’s highs. If they can break through the 2800 level with authority, the bulls have a good chance for taking the S&P 500 to all-time highs again.
The bear ‘o’ meter got a little stronger this past week in favor of the bulls. Overall, the equities markets are holding in their respective trading ranges or making new highs. We are focusing on US Small Caps and US Growth for our momentum positions as both are stronger than their counterparts. Small Caps are clearly leading the charge right now and it seems many other equities markets are following suit. We will continue to focus on US Markets until this changes.
The swing indexes we like are the following: Japan / Extended Treasury / Australia / EAFE Value / Global Wind Energy / Healthcare Sector
This past week was a good week for most of the index swings. The two lagging behind were Global Wind Energy and Extended Treasuries. Treasuries are still sitting on support and get weaker with each closing close to support. Support is like a sand barrier on the beach, each time the wave hits the sand, the sand breaks down and will eventually not hold the water back. Price works the same way on support and resistance, each time price hits support, the less likely support is to hold.
The other indexes had bullish advances. The international equities markets have lagged the US equities markets for the most part so we want to continue to focus new positions on the stronger sectors and markets.
We have quite a few indexes that have set up buy signals coming into this week. They are Transportation, Homebuilders, and Aerospace Defense. Now that we have the buy signal, we need the triggers. If the trigger signals this week, we will to take action.
The bulls are still in charge of price action. Small Caps and other market segments have made new highs. The question remains, will these markets pull the others up or will the others pull these down? A bullish and bearish case can be made, but until we start to see a downward trend on a weekly basis and 12-month momentum falter, we want to be buyers when the triggers signal.
The Education/Gratitude Book Club
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. Seems like a good read so far. Have a great week!
Adam Straseske, CMT