The SPX had a quiet pullback early in the week which caught support near 4175 at the 21 day ema and rebounded strong Friday after the May jobs report. As shown below on the left, the daily chart of the ES futures fired off a squeeze buy signal 3 days ago with momentum pushing up. This looks highly likely to resolve higher next few weeks into that 4295 Fib target or higher. The Nasdaq has more room to run higher it feels like since its been held down by yields, but with interest rates falling sharp on friday there is alot of relative strength showing up in Tech related growth stocks again. The weekly chart on the right shows a clear trend up, and until price closes below the 10 week moving average (yellow dashed line) this can continue to drift up. As we head into mid June and triple witching options expiration on 6/18 with a key FOMC meeting that week, it could start to create a good selling opportunity into that catalyst before a potential pullback into end of June when seasonally things tend to get weak.
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 confirmed breakout mode, RSI 60 back into neutral area and not overbought, Bollinger %B back to 82 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.
New Highs increased last week which supports the bullish trend in SPX.
SENTIMENT- AAII Investor sentiment survey Bullish sentiment ticked up quite a bit this week to 44.1% Bulls from last week at 36.4% Bulls. Bears ticked down to 19.8%. Bulls/bears ratio at 2.23.
Sentiment data is looked at as contrarian and Bullish signals occur when Bulls drop under 35%, or when Bears rise above 50%.
S&P SPY Sector Glance:
Most of the sectors in the SPX are in strong bullish trends as shown below. The only ones slightly below their 8/21 EMA’s are XLY Consumer Discretionary, XLV Healthcare and XLU Utilities but one strong day can change that. We know that Tech has a large weighting in the SPX so with the strong candle Friday this could lead to more upside if XLK continues up.
SEASONALITY ODDS:
Seasonality the week before June options expiration has tended to see weakness by midweek as shown by the sub 40% of years that have gained. Dow has outperformed the S&P and Nasdaq this week over the years. This may provide a dip buy opportunity which then leads to potential strong upside edge during the following week which is options expiration.
Bullish inside week setup: FB Facebook
FB has been riding its 21 EMA higher since its big weekly breakout in March, still seems poised to hit that upper fib target 342 and perhaps 350 round number. This week had a quiet inside candle consolidating gains. This is a momentum setup buying new highs above 332 as the break of the inside bar can lead to new highs for a quick 10-15 pts. Needs to stay above 325 for setup to be valid.
Option trade to consider, long the June 330/340 call spread at 3.50 or better. Going out to July is fine too but will move slower
Individual Stock Scans of note:
Weekly inside candles- FB, CRM, HSBC, GSK, MO, VRTX, KHC, DG, COIN, WBA, DASH, LQD, MRVL, HPQ, PTON, BBY, VIAC, WORK, ZS, YNDX, DLTR, TDOC, CLX, MGM, DKNG, CAH, PENN, UAA, BYND, DKS, SPCE, FSLY, JWN, SPWR, URBN, XBI, ANF, MARA, EWH, LABU, LABD, ASHR, ARKK
8/21 EMA Daily Bull Cross- BHP, TRMB, PLBY, WAL, CREE, PCAR, PCT, LULU, APPS, DUK, BIIB, NVAX, WBA, HFC, MU, DOCU
Stocks compressing in TTM Squeezes within 10% of 52 week highs: AMZN, BAC, MA, CSCO, NKE, ACN, MCD, COST, CAT, IBM, HSBC, MMM, LMT, MO, CI, ADP, FDX, CL, FCX, NOC, BSX, ETN, MET, GD, KHC, DOW, BK, EA, ADM, MCK, ED, IP, EXPE, OKE, HIG, KEY, HYG, HPE, CAG, LB, NTAP, CPB, MOS, APO, CF, ADS, EWU, KRE, FAS, AMLP