Crude oil likely has started its plunge to potentially test May lows

Near-term and intermediate-term technical trends remain bullish for US Equities, and Monday’s rally gave some much-needed confidence that SPX should push back to new highs over the next week, given above-average breadth and a drop in both the US Dollar and US Treasury yields.  While August has proven quite negative seasonally speaking in post-election years since 1950, I don’t suspect much of the weakness gets underway until the August expiration. Overall, it’s technically right to favor that this SPX rally can continue into mid-August before any “stalling out,” and there should be a similar rally in Treasuries, Euro, and Yen vs. the US Dollar. While technical risks are certainly rising in recent weeks, it looks premature to concentrate on these at present as indices begin a climb back to new all-time highs and trends remain positive. My view is that this coming week could prove to be the most positive week of performance for August before some slowdown gets underway.     

Tuesday’s minor weakness looked like a “speedbump” only and not anything indicative of real weakness in US Equities. Equal-weighted $SPX showed just a scant -0.28% loss while $IWM rose nearly +0.50% on the day.

Additionally, there was some meaningful evidence of hard-hit sub-sectors like Transportation making meaningful rebound in the last couple days and six sectors rose on the day out of 11 of the major Equal-weighted $SPX sector ETF’s.

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