The U.S. stock market resumed its rally last week, following three weeks of mostly sideways price activity within a narrow range. Following a much-better-than-expected July jobs report on Friday, the benchmark S&P 500 powered to a new all-time closing high. #-ad_banner-#The tech-heavy Nasdaq 100, up 1.3%, and small-cap Russell 2000, up 0.9%, outperformed the broader market S&P 500, which added 0.4% for the week. At the sector level, last week’s advance was led by financial services (2.2%) and technology (1.3%). The traditionally defensive utilities sector was the worst-performing sector, off 2.7%. The common denominator between financials and utilities is that… Read More

The U.S. stock market resumed its rally last week, following three weeks of mostly sideways price activity within a narrow range. Following a much-better-than-expected July jobs report on Friday, the benchmark S&P 500 powered to a new all-time closing high. #-ad_banner-#The tech-heavy Nasdaq 100, up 1.3%, and small-cap Russell 2000, up 0.9%, outperformed the broader market S&P 500, which added 0.4% for the week. At the sector level, last week’s advance was led by financial services (2.2%) and technology (1.3%). The traditionally defensive utilities sector was the worst-performing sector, off 2.7%. The common denominator between financials and utilities is that both sectors are heavily influenced by U.S. interest rates. Strengthening financials and weakening utilities are characteristic of a market that’s expecting long-term interest rates to rise. I’ll talk about this in more detail later in the report, but before we dig deeper into the interest rate outlook, let’s look at what other indicators are saying about likely market movement. Volatility, Seasonality Still Warn Of A Correction Over the past few weeks, I have stated that near-term downside risk in the stock market exceeds upside potential for a number of reasons, including August and September seasonality (see last week’s report) and current… Read More

The U.S. stock market cooled off a little this past week on the heels of four consecutive weekly gains. The tech-heavy Nasdaq 100 and small-cap Russell 2000 closed slightly higher, but the benchmark S&P 500 and blue-chip Dow Jones Industrial Average finished the week fractionally lower. #-ad_banner-# The S&P 500 has already risen 9.1% since its Brexit low, and my work now suggests downside risk may exceed upside potential in the near term. Technology was largely responsible for what little market strength there was last week, with the sector advancing… Read More

The U.S. stock market cooled off a little this past week on the heels of four consecutive weekly gains. The tech-heavy Nasdaq 100 and small-cap Russell 2000 closed slightly higher, but the benchmark S&P 500 and blue-chip Dow Jones Industrial Average finished the week fractionally lower. #-ad_banner-# The S&P 500 has already risen 9.1% since its Brexit low, and my work now suggests downside risk may exceed upside potential in the near term. Technology was largely responsible for what little market strength there was last week, with the sector advancing 1.4%. Consumer staples, energy and utilities were the worst-performing sectors. Asbury Research’s own ETF asset flows-based metric shows that the biggest inflow of sector bet-related investor dollars over the past one-month and three-month periods went into health care, which fueled the sector’s outperformance. Since its March 17 low, health care has gained 13.4% — more than double the broader market’s 6.5% gain. As long as these inflows of investor assets continue, I expect this trend to continue. Texas Instruments Crushes the Market In the July 11 Market Outlook, I pointed out a bullish breakout in technology bellwether Texas… Read More

Last week, the major U.S. stock indices posted their fourth consecutive weekly gain. The rally was led by the tech-heavy Nasdaq 100, which advanced 1.7%, lifting this market-leading index further into positive territory for the year. From a sector standpoint, the rally was led by technology (1.8%) and utilities (1.5%), while energy (-1.3%) was the week’s big loser. #-ad_banner-# In last week’s report, I warned investors of a potential pullback in stocks in late July due to extremes in investor complacency that were apparent in both the Volatility S&P 500… Read More

Last week, the major U.S. stock indices posted their fourth consecutive weekly gain. The rally was led by the tech-heavy Nasdaq 100, which advanced 1.7%, lifting this market-leading index further into positive territory for the year. From a sector standpoint, the rally was led by technology (1.8%) and utilities (1.5%), while energy (-1.3%) was the week’s big loser. #-ad_banner-# In last week’s report, I warned investors of a potential pullback in stocks in late July due to extremes in investor complacency that were apparent in both the Volatility S&P 500 (VIX) and the CBOE Put/Call Ratio. These extremes indicated historically low market volatility and extremely low put volume relative to call volume. Both of these conditions remain heading into this week, so caution is still warranted. Watch Semis For Signs Of A Pullback Now that we know the market is vulnerable to a pullback, the next logical question is: Where is the pullback likely to start? This week’s first chart shows the PHLX Semiconductor (SOX) index closing in on a test of formidable overhead resistance at its 751 benchmark high from June 2015. That line is only 1.2% above Friday’s close. Read More

The U.S. stock market put in another strong performance last week, led by the small-cap Russell 2000, which gained 2.4% and is now up 6.1% for the year. More importantly, the benchmark S&P 500 has spiked higher by 170 points or 8.5% since the June 27 Brexit low, which keeps my 20,400 upside target in the bellwether Dow industrials alive. Moreover, both the S&P 500 and Dow industrials set new all-time highs next week, which should help to grease the skids for even more strength once the market deals with its latest investor complacency problem, which I will discuss later. Read More

The U.S. stock market put in another strong performance last week, led by the small-cap Russell 2000, which gained 2.4% and is now up 6.1% for the year. More importantly, the benchmark S&P 500 has spiked higher by 170 points or 8.5% since the June 27 Brexit low, which keeps my 20,400 upside target in the bellwether Dow industrials alive. Moreover, both the S&P 500 and Dow industrials set new all-time highs next week, which should help to grease the skids for even more strength once the market deals with its latest investor complacency problem, which I will discuss later. #-ad_banner-# Materials led all sectors of the S&P 500 last week with a 3.9% gain, as only utilities (-1%) finished the week with a loss. I have been pointing out scattered but consistent strength in the commodity space for much of this year, most recently in steel prices. In the July 5 Market Outlook I pointed out an emerging buying opportunity in the VanEck Vectors Steel ETF (NYSE: SLX), which has already gained 13.2% since July 5 and is well on its way to meeting my $33 upside target.  … Read More

In last week’s Market Outlook, I said that even though the short term still looked risky, the tide was turning in favor of the bulls. That remains the case as the U.S. stock market put in another good performance last week. #-ad_banner-#The across-the-board gains in the major indices were led by the tech-heavy Nasdaq 100, which added 2.1%. Moreover, through Friday’s close, this market-leading index has gained a whopping 350 points, or 8.3%, since the bottom of the Brexit sell-off on June 27. Despite this strength, however, the market still has one more big obstacle to deal with before it… Read More

In last week’s Market Outlook, I said that even though the short term still looked risky, the tide was turning in favor of the bulls. That remains the case as the U.S. stock market put in another good performance last week. #-ad_banner-#The across-the-board gains in the major indices were led by the tech-heavy Nasdaq 100, which added 2.1%. Moreover, through Friday’s close, this market-leading index has gained a whopping 350 points, or 8.3%, since the bottom of the Brexit sell-off on June 27. Despite this strength, however, the market still has one more big obstacle to deal with before it is out of the woods, which I will discuss in just a minute. Last week’s broad-based strength was also very apparent at the sector level, as all sectors of the S&P 500 finished with gains except for energy, which lost 1.3%. The rally was led by consumer discretionary (2.2%) and health care (2.1%). Tech Bellwether Also Points Higher In last week’s report, I reminded readers that the mid-April breakout in the bellwether Dow industrials targeted a 14% rise to 20,400. I also said the late-June retest and rebound from the upper boundary of the indecision area near 17,446 established a… Read More

All major indices finished sharply higher last week despite the market’s continued day-to-day choppiness. The tech-heavy Nasdaq 100 led the pack, gaining 3.5% after a big decline the week before. #-ad_banner-# It will still take a sustained rise above the market’s all-time highs — at 2,135 in the S&P 500 and 18,351 in the Dow industrials — to confirm that a new intermediate-term advance is beginning. However, the sharp bullish reversal has set up a potential intermediate-term buying opportunity, as I anticipated in last week’s report, complete with some attractive… Read More

All major indices finished sharply higher last week despite the market’s continued day-to-day choppiness. The tech-heavy Nasdaq 100 led the pack, gaining 3.5% after a big decline the week before. #-ad_banner-# It will still take a sustained rise above the market’s all-time highs — at 2,135 in the S&P 500 and 18,351 in the Dow industrials — to confirm that a new intermediate-term advance is beginning. However, the sharp bullish reversal has set up a potential intermediate-term buying opportunity, as I anticipated in last week’s report, complete with some attractive risk/reward parameters. Last week’s rally was broad-based, with all sectors of the S&P 500 finishing in positive territory, led by real estate (4.4%) and health care (4.1%). Asbury Research’s ETF-based metric shows the biggest inflow of assets on a percentage basis during the past one-week and one-month periods went to utilities, while the biggest outflows came from financials. The performance of both of these sectors was driven by the recent collapse in long-term U.S. interest rates, which adversely affects the profitability of lending institutions and helps drive yield-seeking investors into riskier but better-paying utilities.     A Tale… Read More

Two weeks ago, I warned that rising market volatility, a low put/call ratio and June seasonality collectively warned of a near-term pullback. A week later, I said the market was gearing up for a major move with a bias to the downside. My worst fears were realized on Friday when the much-anticipated Brexit vote shocked global markets as Britain chose to leave the European Union (EU), triggering a massive decline in stocks around the world. It is particularly noteworthy that Friday’s collapse pushed all major U.S. indices back into negative territory for the year. Read More

Two weeks ago, I warned that rising market volatility, a low put/call ratio and June seasonality collectively warned of a near-term pullback. A week later, I said the market was gearing up for a major move with a bias to the downside. My worst fears were realized on Friday when the much-anticipated Brexit vote shocked global markets as Britain chose to leave the European Union (EU), triggering a massive decline in stocks around the world. It is particularly noteworthy that Friday’s collapse pushed all major U.S. indices back into negative territory for the year. #-ad_banner-# Last week’s decline was led by the tech-heavy Nasdaq 100, which lost 2%. And every sector of the S&P 500 finished lower for the week thanks to the one-day market rout. The hardest hit sectors were financial services (-3.3%), materials (-2.5%) and industrials (-2.4%).  The weakness in financial services was directly attributable to the sharp decline in U.S. interest rates, which adversely affects the profitability of lending institutions, as investors flocked to the relative safety of U.S. Treasuries. A Bearish Resolution To Recent Indecision In last week’s report, I pointed out that the Dow Jones… Read More

The major U.S. stock indices finished slightly lower last week, as fears of a Brexit (the U.K. leaving the European Union) put pressure on the market.  The Nasdaq 100 led the way down, losing 1.9%, and the benchmark S&P 500 finished the week almost exactly at the same level it did on April 1, as the index continued to negotiate major overhead resistance at 2,104 to 2,135. A sustained move above this resistance area is necessary to clear the way for the next multimonth advance in the broader market. Until it clears resistance, stocks remain vulnerable to a pullback. Read More

The major U.S. stock indices finished slightly lower last week, as fears of a Brexit (the U.K. leaving the European Union) put pressure on the market.  The Nasdaq 100 led the way down, losing 1.9%, and the benchmark S&P 500 finished the week almost exactly at the same level it did on April 1, as the index continued to negotiate major overhead resistance at 2,104 to 2,135. A sustained move above this resistance area is necessary to clear the way for the next multimonth advance in the broader market. Until it clears resistance, stocks remain vulnerable to a pullback. #-ad_banner-#Last week’s decline was modest but broad based, as nearly every sector of the S&P 500 finished lower, led by financial services (-3%). Brexit fears have nervous investors flocking to the relative safety of U.S. Treasuries, driving long-term interest rates lower, which dampens profitability in the financial sector. Real estate was the only sector to eke out a small gain. Investor Fear Warns Of More Market Weakness In last week’s report, I pointed out that the Volatility S&P 500 (VIX) jumped above its 50-day moving average on June 10 after months… Read More

For the second consecutive week, the four major U.S. stock indices finished essentially unchanged. This recent sideways action leaves the S&P 500, Dow Jones Industrial Average and Russell 2000 all around 2.5% higher for the year, with only the tech-heavy Nasdaq 100 in negative territory, down 3%.  #-ad_banner-#The benchmark S&P 500 continues to negotiate formidable overhead resistance at 2,104 to 2,135, as discussed in last week’s Market Outlook. The strongest sectors last week were energy, consumer staples and utilities, while financials and consumer discretionary were the weakest.   … Read More

For the second consecutive week, the four major U.S. stock indices finished essentially unchanged. This recent sideways action leaves the S&P 500, Dow Jones Industrial Average and Russell 2000 all around 2.5% higher for the year, with only the tech-heavy Nasdaq 100 in negative territory, down 3%.  #-ad_banner-#The benchmark S&P 500 continues to negotiate formidable overhead resistance at 2,104 to 2,135, as discussed in last week’s Market Outlook. The strongest sectors last week were energy, consumer staples and utilities, while financials and consumer discretionary were the weakest.             The table below shows that the biggest positive changes to inflows over the past one-week and one-month periods were in health care, according to Asbury Research’s ETF-based metric. Meanwhile, the biggest outflows during the past one-month and three-month periods came from consumer discretionary, which has declined by 2.5% over the past month compared to a 0.6% rise in the S&P 500.  ​ As long as the recent assets flows into health care continue, we can expect relative outperformance from this sector in the weeks ahead. 3 Reasons For A Near-Term Pullback In last week’s… Read More

#-ad_banner-# The major U.S. stock indices finished last week essentially unchanged, on the heels of back-to-back positive weeks, as the benchmark S&P 500 ran into a wall of formidable overhead resistance. The market is now at a major decision point, pressured by the well-known seasonal influence of “sell in May and go away.” However, I’m starting to see some positive signs that suggest unexpected strength in the market. Interestingly, the three strongest sectors of the S&P 500 last week were all defensive ones:… Read More

#-ad_banner-# The major U.S. stock indices finished last week essentially unchanged, on the heels of back-to-back positive weeks, as the benchmark S&P 500 ran into a wall of formidable overhead resistance. The market is now at a major decision point, pressured by the well-known seasonal influence of “sell in May and go away.” However, I’m starting to see some positive signs that suggest unexpected strength in the market. Interestingly, the three strongest sectors of the S&P 500 last week were all defensive ones: utilities (2.6%), health care (1.6%) and consumer staples (1.1%). The table below shows that, according to Asbury Research’s own ETF-based metric, the biggest positive change to inflows over the past one-week and one-month periods was in financials, while the biggest outflows were from energy. The outflows from energy support my contention that oil and energy-related asset prices are vulnerable to a corrective pullback, which I discussed in last week’s report. Stocks Leaning Higher The S&P 500 finished last week at 2,099, above both its 200-day (major trend proxy) and 50-day (minor trend… Read More