Healthcare on the verge of breaking out to new All-time highs on an Equal-weighted basis

The recent stalling out in most US Equity indices over the last week hasn’t taken away from the appeal of the current rally from early August lows.  A bullish advance back to new all-time highs is still expected into mid-September ahead of any seasonal Fall correction.  The Equal-weighted SPX has already pushed back to new all-time high territory coinciding with the breakdown in the US Dollar and Treasury yields, and Small-caps have started to kick into gear once again.  Furthermore, market breadth remains constructive and sentiment is not yet bullish enough to mark a larger market peak.  Cycles show strength into mid-September in both Equities and Treasuries before a selloff takes hold, and sectors like Financials and Consumer Discretionary have been instrumental in serving as a “tailwind” for Equity gains at a time when Technology has been a bit wobbly.  Overall, unless NVDA, and by extension, Technology, starts to roll over in bigger fashion it looks right to stay bullish.

NVDA’s earnings failed to exceed the highest Sales estimates, though the after-market reaction as of 5pm EST proved fairly muted ahead of the conference call.  My technical take is the lack of a meaningful decline in the after-market could lead to a rebound once Jensen Huang addresses earnings numbers on the conference call.  Without making any kind of deep-dive into the numbers, it’s insightful that NVDA beat on Revenues and sales, and announced a stock buyback, yet the stock merely fell marginally in after-market trading. 

Looking back at Wednesday’s -0.60% SPX decline, this failed to do much damage ahead of $NVDA earnings, and Technology proved to be the only major sector out of 11 which fell more than 1% in trading.  Three sectors were higher on the day: Financials, Utilities and Healthcare.  Much will depend on the ability of NVDA to trade higher on Thursday for Technology and the broader market to begin rebounding sharply back to new highs.  Technically speaking, given a muted reaction to earnings, I feel like such a move should get underway this week into end of month.

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