Discretionary leads the way on breakout to new weekly highs

Tuesday’s mild gains remain under key resistance, but breadth has definitely started to slow in the last couple weeks.  Following a close just above SPX-4124 on 4/3, the last 10 days have brought about only a 30-point SPX rally, or +0.70%.  While certainly positive, it lacks some of the upward thrust that’s going to be necessary to keep this rally going, given Technology having begun to stall a bit in recent weeks.

In the short run, however, the continued rally in Financials in recent days as earnings have gotten underway seems to be a definite positive for the big banks.  A pick-up in Regional banks would be a larger positive for the sector, in my view.

The standout early this week has centered on Consumer Discretionary, and Equal-weighted Discretionary has broken out to multi-month highs.  Casinos, Homebuilders, and Hotels all appear attractive technically, and should push higher in the days ahead.

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