Can this rally in Food Stocks lead Staples to outperform Discretionary?

Short-term trends from January lows remain bullish but have shown some consolidation this week, which has brought the price down from the highs of the most recent range down to test important trendline support. Treasuries and Cryptocurrencies have begun to bounce further in recent days, while the US Dollar showed a sharp decline this past week. Overall, given the subdued sentiment on both a Retail and Institutional level, I continue to view the larger move for Equities as being higher despite the back half of February typically proving seasonally weak. Moreover, a bullish equity structure combined with solid momentum and breadth warrants the overweighting of US equities at a time when investors are largely unclear about the extent of tariffs or their implications. In the short run, the SPX retreat likely should be nearing support into early next week following SPX’s decline to right above 6000 while QQQ hovers just north of 525. As discussed earlier this week, the extent of the rebound in Technology suggests that this minor “backing and filling” in Equities should be buyable, not something that leads to a large decline. 

SPX retreat should be nearing important near-term support

After an unusual week for sector rotation where early week Technology strength gave way to weakness, Staples outperformed Discretionary, and many high-flying growth stocks fell sharply, SPX has retreated down to the key 6000 area. 

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