Software finally looks ready to bounce; Time to Buy CRM to Sell NVDA?

Markets remain choppy and volatile, but the last few days have proven constructive in lifting SPX back to within striking distance of all-time highs just ahead of today’s NVDA results.  Software seems ready to bounce technically after its recent washout, and this might be helpful to Technology, given that it was largely Semiconductors and Tech Hardware that were doing all the “heavy lifting.”  Given that a few cycles suggest that late February into the first two weeks of March might prove volatile, I continue to feel as if watching trends and market breadth carefully make a world of sense given the cross-asset volatility.  For now, until/unless February lows are broken for SPX, QQQ, DJIA, RSP, it arguably still pays to favor additional strength into the end of the month, as prices are nearing all-time highs, and the “Bears” attempts at causing a market decline thus far have proven unsuccessful.   It’s important in the week ahead to pay attention to Treasury yields, as my studies show that yields are close to starting to turn sharply higher. This very well could prove to be a negative catalyst for the U.S. stock market, so watching yields carefully over the next few weeks makes sense.

This week’s short-term rally has nearly reached all-time highs, but breadth has not recovered dramatically in the past week.  While the bounce in Technology has proven helpful towards helping the lift in $SPX and $QQQ, market breadth has barely eclipsed 3/2 bullish during every session this week.

I don’t sense this needs to be a problem, but it should continue to be something that’s watched carefully, given the recent violent sector rotation that’s gotten underway.  $NVDA’s results did seem impressive in beating expectations, though the stock failed to move up meaningfully above resistance near $200 before retreating a bit in the after-hours market. 

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