The market had a quiet week and narrow range of price action even with all the news catalysts the SPX stayed within its option expected range for the week. There was some profit taking into month end after a big run in April but with such strong earnings reports from big cap tech names like AAPL, AMZN, MSFT, FB the price action faded and clearly the new highs were sold into. SPY closed the week just a touch above the 8 EMA but starting to see divergences build so a pullback to the up trending 21 EMA near 412 is possible. Below that the 50 Day MA comes in near 400 and the lower end of a volume pocket created by the gaps higher to start early April. Eventually these open gaps do get filled so something to watch if we slip under April value area. Expected moves for this week priced into the options for SPY are between 410.67 and 423.93 so roughly 6.60 points of expected range. The first trading day of the month is generally stronger with new money flows creating some upside but if that only lasts a day this week then some downside is more likely.
3 PEAKS MARKET SIGNALS:
TREND - SPY Strong bullish trend and Stacked EMA’s on both the short term daily and longer term weekly charts. The 8/21 day moving averages are above the longer term 50/200 day MAs but the momentum has slowed lately with the squeeze indicator showing dark blue histogram bars. All SPY sectors are in bullish uptrends as shown below.
CONDITION/BREADTH - The SPY is extended and with momentum slowing, RSI showing some bearish divergence at recent highs so we can pullback at any time. NYSI Summation index is mixed but pointing up and above its 8 EMA. Cumulative AD breadth is making new highs with the SPY this past week but not the kind of thrust higher you would expect. New highs vs new lows differentials are still positive with the 10 and 30 day MA above zero since November. 86% of stocks in SPX are above their 50 day EMA while 96% are above their 200 day EMA. The chart below shows the Advance/Decline Lines and how the recent new highs in SPX have not seen much strength in the AD figures. Usually can see +400 readings on strong breadth readings, meaning over 400 stocks in the S&P 500 are advancing and that was absent in April.
SENTIMENT- AAII Investor sentiment survey for the week showed a sharp drop in bullish readings for AAII Bulls at 42.6%, down from 52.7%. Bearishness up ticked to 25.7% from 20.5% last week. AAII Bull/bears ratio at 1.66. Sentiment data is looked at as contrarian and Bullish signals occur when Bulls drop under 35%, or when Bears rise above 50%. CBOE total put/call ratio ticked up to 0.95 Friday but overall 50 day MA at 0.78 still shows complacency.
Seasonality Stats for first week of May start out bullish bias but tend to see some weakness by midweek.
Individual Stocks of note:
Weekly inside candles- T, EFA, SLV, KO, MU, MO, UAL, BA, JNJ, MRVL, HAL, DIS, ORCL, XLV, TECK, NKE, NVDA, PM, DOW, ABT, LUV, CSX, EWU, BIDU, HD, ROKU, DIA, PENN, LEN, FUTU, EW, ADBE, AVGO, CGC, MAT, BYND, HCA, LRCX, OKTA, ACAD
8/21 EMA Weekly Bull Cross- VZ, AZN, CL, USFR, TIP, FLWS, BF/B, APLS, SNN, VRM, LDOS, TBIO, VEEV
Stocks in TTM Squeezes within 10% of 52 week highs: GE, C, CCL, CSCO, NCLH, FISV, CVX, HPE, DIS, KHC, NUE, CL, WMT, JNPR, MGM, PEP, DOW, MPC, LUV, TMUS, HIG, ADI, CAT, LVS, UNP, VOD, CAG, CTSH, LEN, OKE, MCD, EA, EMR, MMM, KSS, FLR, CAH, TGT, FL, MAR, BBY