The market had an impressive snapback rally this week after the expiration related selling last Friday held the 50 day MA once again creating a higher low at 4165. Although internals and breadth were not exactly super strong on the move to new highs in SPX. This can continue of course but its a sign of weakening under the hood and likely a yellow flag into the summer months that could create downside risk. The amount of stocks in the SPX above the 50 day MA are also under 50% which is historically a sign of a rally running out of fuel. Just good data points to carry forward and realize things can turn quick in the coming weeks or months. Going into the last week of June and the 2nd quarter ending on Wednesday the 30th its a good time to expect some back and forth or potential pullback after 5 days straight up. The Nasdaq has led the upside lately and will be extended coming into end of quarter so profit taking wouldn’t be unusual to end June.
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 pushing back higher but some negative divergences showing on RSI and MACD.
Breadth recovered a bit but overall not as strong as you would expect as Cumulative Advance/Decline Breadth struggling to make new highs. NYSI Summation index is in bearish short term mode pointing down.
New 52 week highs have been lagging with SPX near highs and last week only improved slightly. NYSE had 213 new highs on Friday.
SENTIMENT- AAII Investor sentiment survey Bullish sentiment ticked down to 40.4% Bulls from 41.1.% last week. Bears down to 23.3% from 26.2% last week. Bulls/bears ratio at 1.73.
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%.
S&P SPY Sector Glance:
6 of 11 SPY sectors are still in strong bullish trends, XLE, XLV, XLC, XLK, XLRE, XLY. Financials had a strong recovery week +4.8% and Tech overall has led continuing the upside. Consumer Discretionary had a strong week +3.3% mostly thanks to TSLA and AMZN, the top two weightings.
SEASONALITY ODDS:
Going into the end of June its generally a bullish tendency, especially in the Nasdaq. July 1st is historically strong and the day before the 4th of July has tended to be weaker. Its important to know these seasonal odds are just tendencies and don’t equal setups for me. When a setup matches up with a seasonal tendency it makes it that much more valuable. With stocks extended since last week was stronger than its seasonal odds it could make for choppier action to end the month. The following week is a 4 day week with the July 4th holiday closed on Monday. The first week of July has shown bullish bias.
Bullish Inside Week Setup: Starbucks (SBUX)
SBUX has a daily squeeze ready to fire higher out of the inside week candle last week. The stock pulled back off April highs and found support above YTD VWAP right into the 21 week EMA. Triggering a move up through 113.25 can pop up to 115.50 first target and perhaps 117 on a strong move.
Trade to consider: Long August 115 calls around 3.00
Individual Stock Scans of note:
Weekly inside candles- JPM, JNJ, WMT, BAC, PG, KO, VZ, INTC, CSCO, ORCL, PFE, CVX, T, TMUS, TXN, MCD, MS, HON, C, UNP, AMGN, SCHW, SBUX, RTX, IBM, GS, CAT, MMM, CVS, ANTM, BP, MDLZ, MO, GM, USB, GILD, ADP, CI, NIO, COF, ITW, BDX, HCA, NSC, VMW, STLA, NOC, ETN, EMR, BNTX, FCX, MET, DOW, SLB, MAR, WBA, BK, CNC, AIG, BAX, MPC, DD, MCHP, ALXN, PSX, SYY, CTSH, GOLD, SU, AFL, PANW, HPQ, CMI, YUM, NTR, GLW, ADM, LYB, XPEV, VLO, WMB, MT, LEN, MCK, SYF, NUE, DAL, BBY, TSN, WY, OKE, EXPE, ABC, IP, RCL, HIG, LNG, CZR, HAL, DKNG, KEY, TTWO, AKAM, NTAP, UAL, ON, WYNN, AAL, NVAX, TECK, TPR, MOS, NCLH, CREE, CF, CLF, JNPR, CIEN, JBL, APA, YETI, THC, OLN, HOG, AA, SFIX, X, TRIP, CC, HLF, HFC, SEAS, SAGE, CSIQ, PLAY, NNOX
8/21 EMA Daily Bull Cross- BABA, NKE, UBER, GILD, ADP, BIDU, NXPI, EEM, KMB, HSY, VFC, KMX, DKNG, GPS, KSS, CPRI, HLF, FXI, CSIQ
Stocks compressing in TTM Squeezes within 10% of 52 week highs: JNJ, PG, CMCSA, CVX, PEP, AVGO, TXN, MCD, MDT, SCHW, SBUX, AMAT, LRCX, MDLZ, ADP, ADI, NOC, JCI, HSY, MCK, HES, WORK, GPS, JBL, CPRI, THC, URBN, SWN, YELP, CYH,