SPX closed out the month of May on a high note after a volatile start and mid-month dip of about 3%, ending the month slightly in the green by +0.5%. After the VIX popped its head into the mid 20s a few times it ended the month near lows sub 17 and showed again why its been very good to sell premium into these IV jumps as the SPX continues to hold the 50 day MA as support all year. Financials XLF led the month with a +5.7% gain, followed by Materials +4.6% and Energy +4.2%. Tech and Consumer Discretionary lagged overall down about -3% each. Some positive breadth continued this past week which helped the market drift higher into a quiet holiday weekend and as June starts next week new money flows likely take the SPX to new highs above that 4240 level which isn’t far away. Cumulative AD breadth as shown below has already made new highs and this is a confirmation signal of strength under the hood of the markets. Sentiment is still not overly bullish as investors quickly got bearish on the recent dip.
SPX weekly chart riding the 8 week EMA higher for now
3 PEAKS MARKET SIGNALS OVERVIEW:
TREND- Short term trend of the 8/13/21 EMA’s = Strong bullish trend
Long term trend of the 21/55/89 EMA’s strong bullish and EMA’s stacked positive.
CONDITION/BREADTH- Momentum now pointing up and the squeeze indicator I use coiling up for move to new highs, RSI 57 back into neutral area and not overbought, Bollinger %B back to neutral at 73.
Breadth has improved in the last week. Cumulative Advance/Decline Breadth made new highs and NYSI Summation index has crossed positive.
New Highs are however lagging a bit lower from April levels but still outpacing New lows as they should.
SENTIMENT- Bullish sentiment still quite low at 36.4% Bulls in this weeks AAII Investor sentiment survey. It has stayed in this range for 3 weeks now even with stocks recovering strong back to near highs. Bears ticked up to 26.4%. Neutral readings have increased. Bulls/bears ratio at 1.38.
Sentiment data is looked at as contrarian and Bullish signals occur when Bulls drop under 35%, or when Bears rise above 50%.
Seasonality for first week of June is bullish overall as new month tends to see new flows, with Tuesday and Wed the strongest after the holiday weekend. S&P 500 has been up 67% of years the first trading day of June.
Individual Stock Scans of note:
Weekly inside candles- AMZN, JNJ, WMT, UNH, HD, CMCSA, T, CVX, WFC, UPS, ACN, COST, UNP, AZN, LOW, CAT, IBM, MMM, JD, DE, BP, NTES, CSX, COP, BDX, BIDU, SO, FCX, NEM, ETN, EMR, DOW, COIN, BNTX, ROST, EBAY, SYY, ALXN, CTSH, LYB, ADM, GLW, LUV, DFS, SU, MT, VLO, WMB, NUE, TSN, KR, HRL, HES, OXY, HIG, WDC, DISH, KEY, STX, ETSY, HAL, LB, XLV, DVN, GDX, SLV, VIPS, TPR, UAA, KSS, XLB, X, FL, XLE, XHB, ITB
8/21 EMA Daily Bull Cross- TSM, QCOM, SBUX, AMD, ETN, LUV, XLNX, OXY, LYFT, PHM, IBB, CPRI, AA, EWY, AEO, TNA, MJ
Stocks compressing in TTM Squeezes within 10% of 52 week highs: JNJ, WMT, UNH, BAC, KO, ORCL, NKE, ABT, PEP, ABBV, WFC, UPS, MCD, COST, PM, UNP, SCHW, HSBC, CAT, AXP, IBM, MMM, USB, BP, CI, FDX, ADP, COP, HCA, VMW, FCX, ETN, MET, EPD, BNTX, JCI, BK, WBA, EBAY, EA, MPC, AFL, LYB, ADM, PSX, LUV, DFS, YUM, SU, VLO, TSN, ED, EXPE, OKE, HIG, KEY, HPE, LB, CAG, LBTYA, WYNN, MOS, APO, TAP, MRO, FLEX, JNPR, CCJ, YETI, FL, NAV