A few different ways to play the Commodity rally for Equity investors

Near-term US Equity trends remain positive, and Tuesday’s minor pullback in Technology doesn’t serve to break the uptrend, which likely should continue to push up into and through Technology earnings this week. While the percentage of stocks above their 50 and 200-day moving averages has begun to fade modestly from recent peaks, this does not rise to the level of a technical warning at present, and the breadth deterioration remains narrow in scope rather than broad-based.  Meanwhile, recent pullbacks in the DJ Transportation Average and Consumer Discretionary look temporary and buyable in my view, as neither has violated its uptrend from the March lows, and Defensive sectors are continuing to show lagging tendencies. The overweight stance in Financials, Technology, and Industrials remains appropriate technically, and it's right to lean bullish and use any dips as an opportunity to add exposure.  The comeback in “Magnificent 7” ahead of earnings this week is seen as a technical positive, and more is needed to think markets might be stalling out.  While the combination of Tech earnings along with eventual signals from DeMark-related exhaustion, and month-end pension rebalancing could be important, this seems premature ahead of earnings, and Tuesday’s dip is likely buyable. 

As discussed in Tuesday’s Flash Insights, the above-average selloff for Technology today directly followed a parabolic 20% move higher in this sector for the month of April, which has seen Mag 7 rebound sharply into earnings later this week.  I don't see this as all that problematic towards the near-term trend, and Mag 7 is likely to gain ground into the end of the week along with SPX and Nasdaq.  

While the OpenAI target miss has resulted in a -2%+ loss for Technology today (the biggest underperformer of all 11 major Equal-weighted sector ETFs), trends and momentum should likely push higher into the end of the week, even if Equal-weighted $SPX does not also follow suit. My thinking is that the area at 50-61.8% of the bounce from 4/23 should cushion $SPX at/near 7098 up to 7113 before $SPX starts to push back higher to 7200 and a bit above. 

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