Small-caps could very well outperform SPY over the next 4 months

Near-term and intermediate-term technical trends remain bullish for US Equities, but it’s thought that the rally in US Stocks likely will face resistance at marginally higher levels, which might limit the rally to 6500-6600 before some consolidation gets underway. Overall, despite some of the minor concerns regarding Elliott-wave patterns nearing completion, seasonal/cyclical periods of weakness approaching and waning breadth, it’s going to be necessary to see evidence of US Equity index prices turning down in a manner that would help to add conviction to these concerns. Both the US Dollar and US Treasury yields seem to be headed lower in the weeks to come, and this is thought to be helpful for US risk assets. Overall, while it’s proper not to grow too complacent in August, it’s also proper to let this rally run its course until the market demonstrates evidence of starting to weaken.  For now, it still appears that the path of least resistance remains higher. If/when SPX gets under early August lows at 6212.21, it will be proper to discuss a pullback getting underway. At present, with NVDA earnings on deck, and this stock having formed a bullish triangle pattern, it’s difficult to be too negative just yet on the broader market.

No meaningful net change on the US Stock market on Monday, but some encouraging strength out of Technology that prevented indices from showing much damage, given that 8 sectors out of 11 saw negative performance.

This week looks important given Retail earnings from stocks like WMT along with Friday’s Jackson Hole speech by Fed Chair Powell.  Yet, stock indices haven’t shown much weakness since early August despite this month lining up to show potential seasonal and cyclical weakness.

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