Technology, Discretionary, Comm. Svcs holding markets up despite poor breadth

SPX has now pushed higher for 12 out of the last 14 days, while market breadth has been negative nearly every day this week.  While this reflects an admirable comeback in the formerly lagging groups like Technology, Consumer Discretionary, and Communication Services, while most other sectors have fallen in price since late November. I expect that the next two weeks present the optimal period from a cyclical perspective to consolidate some of these recent gains, but until the price makes at least a close at multi-day lows, Equity trends remain bullish, even if it is just a few sectors carrying the load. Treasury yields and the Dollar have both turned down over the past month and trends in both should head lower into year-end while US Equities experience a minor “Blip” lower to alleviate some of the recent overbought conditions before trends head further to the upside. However, the fact that Growth is making a big comeback this month and rate cut expectations are growing based on the Swaps market are both positives, in my view that should reward investors into January.

As discussed in recent days, I’m not thrilled with the short-term risk/reward with SPX at 6100 given the upcoming economic data over the next couple weeks as part of a market with heightened cross-asset volatility. 

Looking back since mid-to-late November, only Comm. Svcs, Consumer Discretionary, and Technology are at multi-month highs. (These also, along with Consumer Staples, have been the only sectors that have shown gains in the last week.)  

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