Minor breakouts in Financials, Discretionary encouraging as SPX nears all-time highs

SPX and QQQ look to have made important lows in late March and now are nearing All-time highs, which might offer some temporary resistance after such a sharp rally in the last two weeks.  Technology’s breakout has been joined by minor breakouts in both Financials and Consumer Discretionary, which generally are constructive for the risk-on rally for the months ahead.  Market breadth has expanded so rapidly that some consolidation should be necessary by May at some point, which would also gel with the bearish late-month seasonality during mid-term April performance.  However, at present, WTI Crude does look to be starting to turn down in a sharp manner, which, along with US Dollar weakness, should both be constructive for risk assets.  Overall, I expect that any consolidation for US Equities could start between Wednesday and Friday of this week, with prices having pushed up 10% off the lows to near all-time highs.   Yet, it’s tough to consider any pullback to be the start of any meaningful consolidation, given the positive action out of many sectors.  I suspect that it will be tough to build too much upon an already strong initial advance, and SPX and QQQ both should show some consolidation into May before turning higher for a larger rally.  Overall, it looks right to be long into late Summer and use consolidation as a chance to buy dips. For now, there’s no technical evidence that any stalling out has occurred just yet, but some resistance is thought to occur at fractionally higher levels.

$SPX has now moved nearly 10% higher in 10 trading days following Tuesday’s close at 6967.39, or +9.8%, which equates to roughly 1 unit of price per unit of time, or nearly 1% on average a day since the end of March.

This is a very strong initial advance off the lows at this point, which is starting to show signs of broadening out in recent days, given participation in sectors like Financials and Consumer Discretionary.  

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