SPX has broken trend vs. All-World index; Homebuilders breaking out

Trends for Equities remain upward sloping based on Equal-weighted SPX, though they are still quite choppy in the short run when eyeing both SPX and QQQ. While the Advance/Decline line recently pushed back to new highs for NYSE securities, it’s still troubling that recent lackluster volume and short-squeeze activity has been ongoing as major US indices churn near all-time high territory.  The recent Software and “Mag 7” weakness has resulted in Technology falling out of favor and has actually resulted in SPX breaking down from multi-year uptrends vs the All-Country World index.   While a strong snapback in Technology in the weeks ahead might temporarily cause this deterioration to reverse, I suspect that 2026 is a year of consolidation in US Equities, which should be led by Technology.  Meanwhile, it looks likely that the bounces in both Cryptocurrencies and Precious Metals can extend in the near-term, while the US Dollar and Treasuries both look to be in downward sloping trends. Overall, until this choppy trend is resolved, I still feel like the month of February can prove choppy, though, with strength expected in the back half.   Bottom line, I expect that SPX gains might be limited to 3-4% and keeping a close eye on breadth will be important over the next month.

Given the neutral sideways consolidation in both $SPX and $QQQ in recent months, it’s necessary to turn our focus elsewhere in the near-term until these ranges can be broken.

In the short run, one important development in recent weeks concerns the breakdown in the S&P 500 in its relationship to the All Country World Index (Shown below in ratio form as SPY vs $ACWX (iShares MSCI ACWI Ex US ETF).

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