Energy Being Lowered to Underweight as larger Crude Oil Breakdown looks near

Near-term US Equity trends remain constructive, but with $SPX and $QQQ having largely reached my prior price targets and DeMark time-based exhaustion now approximately 2-3 days away on daily charts, my view is that further upside is likely capped over the next 1-2 sessions, with $SPX unlikely to exceed 7300 and $QQQ stalling below 680. The more interesting development, however, is that Crude oil looks to be turning lower here, and given the persistent negative correlation between Crude and Equities since the Iran war began, this Crude breakdown is thought to be quite constructive for risk assets and should help limit downside as Equities work through this near-term DeMark exhaustion. Potentially, this is shaping up as a "Buy the Rumor, Sell the News" event for Energy specifically — Crude's roll-over technically suggests that the macro tension which had been driving Crude higher is now beginning to fade, and as a result, I am lowering Energy to an Underweight technically. Both $XLE and $OIH look vulnerable on Crude's breakdown, and any further weakness in Crude over the next 1-2 weeks should be expected to drag the Energy complex meaningfully lower. Overall, technically speaking, it remains right to lean bullish on the broader market while reducing Energy exposure here, with the Crude-down/Equities-up relationship intact.

Invesco QQQ Trust ($QQQ) - DeMark time-based targets approximately 2-3 days away; expecting stallout below 680 near-term

As shown below, $QQQ looks to be potentially two days away from signaling its first TD Sequential “13 Countdown” signal following the formation of a TD Combo “13 Countdown” (Sell) four trading days ago.

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