Market breadth might improve over the next couple weeks- Here’s Why

US Equity indices are likely starting to turn back higher to new all-time highs into mid-July (QQQ and SPX accomplished this today) despite the growing drumbeat of skeptics warning of possible 3Q implosion for stocks.   I sense that Treasury yields should be starting to pull back to new monthly lows in the near future and US Dollar likely should follow suit.  Overall, cycles, seasonality, and ongoing strength in Technology argue for a bullish stance in US Equities into at least mid-July into and after the July 4th holiday, which might last into July expiration before some backing and filling. While Technology should lead US Equities into mid-July, increasingly, sectors like Industrials, Financials, and Large-cap Discretionary are showing evidence of strengthening a bit, which could bode well for these sectors to start to join suit and participate in aiding market strength.  SPX targets could materialize between 5650-5750 before any consolidation gets underway.

Overall, as discussed in yesterday’s note “It’s thought that the combination of FOMC Chair Powell’s comments on Tuesday along with Christine Lagarde could reflect more of a dovish tone that allows Yields and the US Dollar to begin to work lower.”

Given the rise in correlation between Equities and Treasuries, it’s thought to be positive for US risk assets as Treasury yields start to work their way lower.    

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