SPY should be favored over Chinese Equities

Markets have begun the process of bottoming out and have carved out the first meaningful move off the lows since late last week. While many are eager to know if “the bottom is in” or not, the simpler answer is that breadth and momentum look to have bottomed, along with the Equal-weighted S&P 500. Given that weekly momentum remains so sharply negative and insufficient progress off the lows has happened just yet, it will take a while longer before we are able to say with confidence that major US Equity market lows are in place. However, it’s arguably right to be long for a push-up into Summer 2025 at a minimum, and even if some backing and filling do happen over the next week, it’s thought to prove temporary and create an excellent risk/reward situation for US Stocks. The downside should be limited to roughly 3%, while the upside back to new all-time highs should get underway to carry SPX up more than 9% initially.

Monday’s bounce successfully helped Equal-weighted SPX to extend gains following its late week bounce last week to recapture mid-January lows.

This proved to be a very constructive move technically, which has jump-started the broader market, pushing higher, even if Technology requires a bit more time. As many investors noticed on Monday, stocks like $AAPL, $NVDA, $SMCI, and $TSLA struggled to match the performance of the broader market.

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