US Equity trends remain bullish, with ^SPX continuing to push toward 7,600 and the rising trendline from the April lows intact. However, despite the mid-May lift in many Equal-weighted S&P sectors, it’s not wrong to say that leadership remains top-heavy and some participation out of groups like Financials, Healthcare, and Industrials will be important in the weeks to come. Counter-trend exhaustion signals look close to joining in unison across daily and weekly timeframes this week on SPY, SMH, and QQQ, so increasingly I expect this could bring about some backing and filling for this recent rally before a larger push up toward 7,725–7,750 this summer. Market breadth was negative today as well, with defensive groups and Financials lagging, and the cross-currents I have been cataloging across recent notes continue to build into a possible near-term inflection point that warrants a close eye in the days ahead.
SPY exhaustion signals look close to joining in unison across daily and weekly timeframes, but prior similar signals in May failed to confirm
SPY trading near 757.56 is showing counter-trend DeMark exhaustion configurations that look close to joining in unison across daily and weekly timeframes this week, with similar configurations developing concurrently on QQQ and SMH. This kind of multi-index alignment of exhaustion-style signals tends to carry more weight than a single-index reading, but it is difficult to put too much weight on these signals until properly confirmed by subsequent price action.
Prior similar exhaustion-style signals appeared back in May and failed to confirm, with the rally continuing to push higher. That history argues for caution in over-interpreting the current configuration without confirmation. Until the signals confirm — via a daily and/or weekly close under the close from four periods prior — the broader uptrend remains intact, and trend respect still says it is hard to fade a multi-month move that has not been technically broken. My expectation is that this configuration could bring about some backing and filling on a short-term basis, potentially starting by the end of the week. However, barring a reversal down to new multi-day lows, trying to fade this sharp rally has proven difficult and is frankly ill-advised without proof.
SPDR S&P 500 ETF Trust (SPY, daily) – Counter-trend DeMark exhaustion configurations look close to joining in unison across daily and weekly timeframes this week
^SPX still pointing higher in absolute terms with the rising trendline from April lows intact above the Ichimoku cloud
With regards to a traditional trend-following approach without considering DeMark signals, it’s evident below that ^SPX continues to grind higher, trading near 7,596, with the rising trendline from the April lows intact and price remaining well above the Ichimoku cloud.
Ichimoku levels of importance are represented on daily charts by the Conversion and Base lines — Tenkan-sen sits near 7,466 and Kijun-sen near 7,353 — as the layered structural references, both of which recalculate daily and have continued to step higher as the rally has progressed.
The trends remain very much intact and until/unless 7,466 is broken at a minimum, the exhaustion configurations on SPY discussed above won’t matter just yet. Overall, the structural picture into the summer remains constructive with the 7,725–7,750 area as the next meaningful upside target. My expectation is that any pullback into mid-June should not undercut May lows and might just retrace 38–50% of this rally since mid-May before pushing even higher.
S&P 500 Index (^SPX, daily) – Rising trendline from April lows intact with price well above the Ichimoku cloud; Tenkan-sen 7,466 and Kijun-sen 7,353 as two initial important areas of support
IGV/RSP monthly shows multi-decade Software leadership over equal-weighted ^SPX with the rising trendline from 2020 lows intact
The monthly ratio of IGV (Software) versus RSP (Equal-Weight S&P) has snapped back dramatically in recent weeks as Software has started to strengthen more meaningfully.
Just in the last three trading days, IGV (iShares Expanded Tech-Software Sector ETF) has been higher by more than 10% as the reverse head-and-shoulders pattern gave way to an upside breakout back on 5/7.
This ratio chart has recouped about 50% of the downdraft from this past winter, and the uptick in momentum and strength looks important and bullish for Software.
However, leadership remains top-heavy. Software acceleration is doing useful work for the cap-weighted leadership, but increasingly, other sectors will need to start participating to sustain the broader rally beyond the near-term targets.
At present, my favorite Software names are FTNT, CRDO, PANW, CRWD, DAVE, NOW, ORCL, PLTR, APP, MSFT, and TEAM.
On any minor drawdown in Technology in the month of June, it would make sense to give these Software names some consideration vs. adding to the Semiconductor and Memory names. I’ll discuss this in more detail when it becomes more timely.
IGV / RSP Monthly Ratio – Multi-decade Software leadership over equal-weighted ^SPX with the rising trendline from the 2020 lows intact
RYF/RSP weekly Financials ratio at multi-year lows — Persian Gulf ceasefire could help parts of the market outside of Technology
The weekly ratio of RYF (Equal-Weight Financials) versus RSP (Equal-Weight S&P) has fallen to multi-year lows near 0.36 after a sustained decline from the 0.42 peak in early 2025. At the current level, DeMark counts are at early stages: TD Combo count is at 8 of 13, and the Setup count is at 5 of 9. These are early observations rather than registered signals, and several more weekly bars need to print before either indicator reaches a level that would warrant calling it a Buy Setup or Buy Countdown.
More broadly, a Persian Gulf ceasefire could begin to help parts of the US stock market outside of Technology in the weeks to come, with Financials sitting at multi-year relative lows as one of the candidates that might possibly benefit from a broadening rotation.
While I had discussed the comeback in Consumer Discretionary last week, it’s important to note that sectors like Financials, Industrials, and Healthcare largely have not participated.
For now, the right framing is that Financials sits on the watch list as a possible future rotation beneficiary on a macro catalyst, but the technical configuration is still early-stage and the relative downtrend has not yet shown evidence of ending. Stay tuned.
RYF / RSP Weekly Ratio (Equal-Weight Financials vs. Equal-Weight S&P) – Multi-year lows near 0.36 with DeMark counts at early stages (TD Combo 8 of 13, Setup 5 of 9)
Crude barely undercut $89 before stabilizing and bouncing today — mild rally possible but no meaningful strength above $100 before a larger drawdown
WTI Crude barely undercut $89 last week before stabilizing and bouncing today, with the chart now showing a developing setup for a mild rally as the near-term oversold conditions work themselves off. However, the larger pattern continues to argue that this bounce will prove counter-trend in nature, and I am not expecting meaningful strength above $100 before a larger drawdown takes hold.
My expectation is for Crude to push mildly higher into potentially the end of the week/early next week before reasserting the larger downtrend, with the $101 area — near the descending trendline from April — serving as technical resistance on this bounce attempt.
The directional bias remains for Crude weakness over the coming months, which is supportive for risk assets broadly and consistent with the soft-Dollar macro backdrop I have been discussing. Movement back under $86.35 (intra-day lows for WTI Crude) would suggest this larger decline is reasserting itself.
WTI Crude Oil Futures (CL1!, daily) – Barely undercut $89 before stabilizing and bouncing; mild rally possible but no meaningful strength above $100 before a larger drawdown
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