Energy could be in final stage of push higher into April/May

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Near-term SPX trends remain bearish, and trends and momentum remain negatively sloped as WTI Crude’s rally continues to be a factor that Equities have responded negatively to in recent weeks. Until evidence of capitulation arises and/or meaningful structural improvement, along with breadth and momentum starting to turn higher, it’s thought that yet another pullback to new lows could be possible over the next few weeks that would more clearly line up with a time when risk assets might stabilize. Overall, sentiment is getting more negative, but there hasn’t been capitulation; trends in long-term interest rates, along with WTI Crude, remain pointed higher. I believe most investors should continue to favor a heavily diversified stance and overweight defensive sectors like Utilities, Telecom, and Pharmaceutical stocks until Technology can show more evidence of stabilization. Energy looks to be kicking back into gear, and while stretched, could outperform over the next month before starting to turn lower.

As might be expected, the bounce attempt on Monday was largely reversed on Tuesday, given the rally in Crude, and Interest rates also pushed higher into Tuesday’s close.

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