The SPX continues to grind up slowly towards new highs into a big June triple witching options expiration week. Last week was mostly quiet with eventual strength closing the week at highs, especially in technology as the QQQ Nasdaq etf led the upside and now very close to taking out the late April highs above 343. I have been looking for the ES_F futures to clear this 4225 zone and get up to 4300 area this month but even with the break higher Thursday last week, it wasn’t as powerful of a push as one might have expected. Maybe options expiration week gives it the added boost but after this week, the risk of downside reversals start to increase, especially from new exhaustion highs. For now, internals and breadth are confirming the push higher but notice how the key moving averages I use (8,21,34,50) are converging higher and closer together. It really has been a stock pickers market as the major indexes have mostly been in choppy tight ranges since April. SPX has overlapping value areas in April and May between 4100-4200, now June is trying to build value higher as it should but if cannot stay above 4200, its a yellow flag going into end of month for me.
3 PEAKS MARKET SIGNALS OVERVIEW:
TREND- SPX 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- SPX Momentum now pointing up and the Squeeze confirmed breakout mode but slight fallback on the squeeze momentum histogram to dark blue shows lack of strong thrust higher late last week. RSI 62 still in neutral area and not overbought, Bollinger %B back to 88 and closer to being overbought soon.
Breadth is strong as Cumulative Advance/Decline Breadth made new highs and NYSI Summation index is in bullish mode. This is very important as its showing under the hood of the market advancers are outpacing decliners before the index fully breaks out.
New 52 week highs are somewhat lackluster here and would prefer stronger readings. With the SPX closing the week at new highs, just 34 stocks in the S&P 500 hit new 52 wk highs Friday.
SENTIMENT- AAII Investor sentiment survey Bullish sentiment ticked down to 40.2% Bulls from last week at 44.1% Bulls. Bears ticked up to 20.7% from last week at 19.8%. Bulls/bears ratio at 1.94.
Sentiment data is looked at as contrarian and Bullish signals occur when Bulls drop under 35%, or when Bears rise above 50%. Bearish signals occur when Bulls exceed 55% or if Bears drop under 20%.
NYSE 52 week highs lower than they were in April. Slight divergence forming. 20 day Average at 249
S&P SPY Sector Glance:
All of the sectors in the SPX are in strong bullish trends as shown below. The sectors that improved this past week were XLY Consumer Discretionary, XLV Healthcare and XLU Utilities. Tech XLK sector also strong this past week and with its higher weighting in SPX helped things. XLB Materials is one to watch this week as its forming a squeeze consolidation near its 21 ema.
SEASONALITY ODDS:
Seasonality for June options expiration week has tended to be strong into midweek as shown, Tuesday has been the strongest day of the week overall the last 21 years up 67% of years. Going into the week after expiration is a different story and one of the more bearish seasonality weeks of the year. It could be a great time to take things off the table going into this historically weaker end of June period.
Bullish inside week setup: TXN Texas Instruments
Semi stocks have been in a bullish consolidating pattern as SMH etf shows. Quite a few leaders in the space have already broken out to new highs like NVDA. Last week TXN had an inside week candle and closed near the highs. A break above 190 trigger likely leads to 195 quick, or even 200 in a strong market.
Trade to consider: Long July 190 calls at 4.00 or better. Target 195. Stop under 186 or trail up after the breakout.
Individual Stock Scans of note:
Weekly inside candles- TSLA, CMCSA, KO, ABT, TXN, COST, QCOM, SBUX, LRCX, CL, BSX, WDAY, SLB, JCI, MAR, ROKU, KMB, GLD, PXD, MTCH, CTSH, GLW, YUM, NUE, DAL, OXY, HRL, AMC, DLTR, WPM, HAL, FUTU, ETSY, SPLK, XLY, SLV, APO, TPR, GPS, CGC, IAU, XLP, KSS, CPRI, ICLN, AEO, SMH, HFC, FEYE, URBN, DDD, BBBY, ANF, GRWG, XME
8/21 EMA Daily Bull Cross- INTC, BHP, NOW, DG, CDNS, TDOC, HZNP, XLY, GDDY, XLU, INSM, RIOT, CSIQ, MX
Stocks compressing in TTM Squeezes within 10% of 52 week highs: WMT, MA, BAC, PEP, WFC, ACN, MCD, COST, PM, UNP, SBUX, MMM, MO, PNC, CL, SO, BSX, MET, GD, KHC, DOW, DD, KMI, AFL, GLW, YUM, KKR, EXPE, IP, OKE, HIG, WDC, STX, HPE, LB, APO, MOS, CPRI, HOG, SWN