Economic Production: ISM PMI vs. SPX

Analysis: No changes since last week.
ACH: 8

Economic Activity: Regional Banks Performance

Analysis: No significant change since last week.
ACH: 3

Interest Rates: FED, 2yr, 10yr, and 30yr Rates

Analysis: Rates continue to increase and the market continues to ignore them. How long this will last is anyone’s guest.
ACH (inverted color): 11

Indexes: What is happening?

TA: Price Action, Trend, Momentum & Volume:
Weekly & Daily SPY, QQQ, and IWM

Update: I’m removing IWM. Honestly, I do not trade anything in IWM and what we call “the market” is not that influenced by small and medium companies. There are too many big fish in the pond to bother with the smaller ones. I want to keep myself focus on what matters, and IWM, for my method, does not matter. I’m updating the ACH significantly in all analysis due to the removal of IWM.

Technical Analysis:

• Price (SMAs & Cloud): Weekly: SPY and QQQ bounced and stayed above their 20D SMA. QQQ is about to reach ATH. Daily: SPY keeps bouncing between the 20D SMA and ATH levels. QQQ is attempting to break above ATHs. ACH: 9

• Trend (ADX): Weekly: ADX seem to start an uptrend signal in both indexes. The trend is still weak yet this may signal the beginning of a new one. Daily: SPY is trendless. QQQ has sharply reversed from a bearish to a bullish trend that is starting to get stronger. ACH: 8

• Momentum (MACD): Weekly: ‘Toppy’ MACD, specially in SPY, but we know that markets can stay in toppy momentum for quite a while. Daily: SPY hovering at the 0 level. QQQ seems to start taking off. ACH: 8

• Volume (MFI): Weekly: Previous weeks bearish divergences have brought MFI to neutral levels. There is room in both directions for the market to follow. Daily: SPY is in a sub 50 level and QQQ almost at 50. Both are signalling upper room to accelerate to a bullish trend. ACH: 7

Breadth: % Stocks above SMAs

Above 200 Daily SMA

Above 20, 50, and 200 Daily SMAs vs. RSP

Analysis: % of stocks above their 200D SMAcrossed below the signal line. 50D %s is below the 50% middle line and approaching extreme low levels. 20D is recovering from extreme lows. Seeing also that RSP is approaching its 200D SMA, we may start seeing the end of this correction move.
ACH: 4

Volatility: Ratio Low Vol. Stocks / SPY vs. RSP & SPY

Analysis: Ratio remains above the signal line (50D SMA) and this past week has even increased its upper trend.
ACH: 10

Volatility: (Inverted) VIX vs. SPY

Note: This chart is mainly to detect extreme volatility situations that, once they reverse, offer great long opportunities in the market.

Analysis: Inverted VIX crossed back above the SMA signal line. Low volatility is expected.
ACH: 12

Options: (Inverted) Put/Call Ratio vs. SPY

Analysis: Change to an uptrend.
ACH: 10

Options: Gamma Exposure – SPY

Analysis: Back to positive GEX territory. We start seeing movement even above 800 level while the lower wall has moved up to 760.
Upper wall(s): 800
Lower wall(s): 760

Sectors: Where is it happening?

Sectors Rotation

Summary:

AMAT Portfolios

Forever Portfolio

The World of Tomorrow

Last Word

Above is the seasonality chart for the last 25 years. We are about to start the best historically-based months, from October to May. You know that saying of ‘sell in May and go away’. But when do you come back buying? In October!

Breadth is in a nice place as well:

We have plenty of stocks under their 200D (red), 50D (blue) and 20D (green) SMAs. In the Percentage of stocks below their 20D SMA chart (green) we can see already some bouncing action. The chart above is telling us that stocks have been through a correction period and we shall have plenty of room to run to the upside.

When you have history and breadth aligned for the best months in the market, only a black swan type of event could derail us. Which probabilities would you like to play? 25 years of tailwinds or a rare event? For me… let me fly!

Disclaimer: The content on AMAT Investing is strictly for educational and learning purposes. The author is not a licensed financial advisor and holds no formal financial education. This post does not constitute professional financial advice. All investing involves risk of loss. Always conduct your own research and consult a licensed professional before making any investment decisions.

Economic Production: ISM PMI vs. SPX

Analysis: No changes since last week.
ACH: 8

Economic Activity: Regional Banks Performance

Analysis: Depending on the trendline that we consider, KRE may be still on an uptrend, and just going through a small correction (ACH 7), or it has failed to break above previous resistance and is starting a downtrend (ACH 2).

The above chart’s scale is %YoY. If we look at a price chart…
5 years weekly:

1 year daily:

In the weekly chart we see an equivalent situation to the YoY% chart. A clear uptrend with bounces off the 50W SMA. In the daily chart, we see a declining trend, that most probably will bounce off the 200D SMA.

As I like to set the AMAT Clock Hour to the daily timeframe more than any other. I will change from a 7 hour to a 3 hour reading.
ACH: 3

Interest Rates: FED, 2yr, 10yr, and 30yr Rates

Analysis: FED hiked rates by 25 basis points to 4%. Short and long term rates responded accordingly. Yet historically speaking rates around 5% are quite normal:

Maybe the issue is not on the rate but on the spending trend the US (and the majority of all others) is in.

If, in the coming months, we see some sort of inflation cooling, specially due to the new PCE calculation, and government spending restraint, maybe due to a gridlock between Republicans and Democrats in the US Congress after the elections, we could see rates going lower and a good moment to load up to TLT:

ACH (inverted color): 11

Indexes: What is happening?

TA: Price Action, Trend, Momentum & Volume:
Weekly & Daily SPY, QQQ, and IWM

Technical Analysis:

• Price (SMAs & Cloud): Weekly: SPY found support on its 20W SMA, QQQ crossed below and bounced to close above it, and IWM broke below it last week and this week remained below it. Daily: SPY keeps bouncing between 20D and 50D SMAs. QQQ raised above the 20D SMAs. IWM is falling below the 100D SMA with the next support down to the 200D. ACH: 2

• Trend (ADX): Weekly: ADX weak and trend-less for SPY and QQQ, while bearish trend starts to dominate in IWM. Daily: ADX for SPY is on a bearish territory with an increasing trend. QQQ has very weak ADX. IWM is in a strong bearish trend. ACH: 2

• Momentum (MACD): Weekly: All markets are rolling over their distribution phase into a downturn. Daily: SPY and QQQ hovering at the 0 level. Will they find support here? IWM on a freefall. ACH: 3

• Volume (MFI): Weekly: All indices have bearish divergences. Daily: QQQ seems to have bottomed out. SPY and IWM still have more time to go. ACH: 4

Breadth: % Stocks above SMAs

Above 200 Daily SMA

Above 20, 50, and 200 Daily SMAs vs. RSP

Analysis: % of stocks above their 200D SMAcrossed below the signal line. Both 20D and 50D %s are below the 50% middle line.
ACH: 3

Volatility: Ratio Low Vol. Stocks / SPY vs. RSP & SPY

Analysis: Ratio remains above the signal line (50D SMA) and this past week has even increased its upper trend.

Note: This divergence between the volatility signal and RSP and SPY has already occurred before, for example between May and July 2024 or between December 20024 and February 2025. We can interpret with this divergence that the current bearish trend in the markets could increase in case this signal reverses its bullish trend. Until then, we shall see the current drop in the markets as shallow and short-lived.

ACH: 10

Volatility: (Inverted) VIX vs. SPY

Note: This chart is mainly to detect extreme volatility situations that, once they reverse, offer great long opportunities in the market.

Analysis: Inverted VIX crossed back above the SMA signal line. Low volatility is expected.
ACH: 1

Options: (Inverted) Put/Call Ratio vs. SPY

Analysis: Almost no change in P/C ratio compared to last week (and already few weeks in a row with the same situation). I’m setting ACH to 12 due to the flat structure that this signal has taken.
ACH: 12

Options: Gamma Exposure – SPY

Analysis: Slightly in negative GEX territory. Upper wall moved up to 800.
Upper wall(s): 800
Lower wall(s): 750

Sectors: Where is it happening?

Sectors Rotation

Summary:

AMAT Portfolios

Forever Portfolio

The World of Tomorrow

Last Word

I want to highlight the market action of last Friday (above). This is two days after the Fed hiked rates (Wednesday 2pm). Below, is the 5-minute chart for September 15, 16 (Fed rate day), 17, and Friday 18.

I may be not an expert, but the reaction of the market after the rate hike has been “n’importe quoi”.

Looking at not only the SPY but as well the Nasdaq, Dow Jones, and Russell…

We see how technology welcomed the hike (?) while other industries, and specially mid and small cap. dropped (logical).

Is the Nasdaq sending us a message saying that all is good and that the party continues?

Disclaimer: The content on AMAT Investing is strictly for educational and learning purposes. The author is not a licensed financial advisor and holds no formal financial education. This post does not constitute professional financial advice. All investing involves risk of loss. Always conduct your own research and consult a licensed professional before making any investment decisions.

Economic Production: ISM PMI vs. SPX

Analysis: No changes since last week.
ACH: 8

Economic Activity: Regional Banks Performance

Analysis: No significant changes since last week.
ACH: 7

Interest Rates: FED, 2yr, 10yr, and 30yr Rates

Analysis: Good job numbers meant bad news for rates with a sharp increase. PPI YoY came to a hot 5.4%, core PPI YoY printed 4.6%, and core inflation YoY stayed at 2.4%.

Note: The U.S. Bureau of Economic Analysis (BEA) has introduced a major methodological revamp to its Personal Consumption Expenditures (PCE) price index formula, slated to officially take effect and appear in the comprehensive data revision on September 30, 2026. The modifications will apply retroactively to historical data going back to 2021. Wall Street and independent economists estimate that these formula adjustments will shave roughly 0.1 to 0.3 percentage points off recent Core PCE inflation readings. Prior to the adjustment, July core PCE inflation was holding at 3.3%. The mathematical shift downward is drawing heavy scrutiny from market participants, as a lower structural inflation readout could grant the Federal Reserve more flexibility in upcoming interest rate policy decisions. Source: https://www.wsj.com/economy/central-banking/pce-inflation-data-updates-ca7bfd61

Due to this change in the favorite’s Fed inflation indicator, I’m expecting rates to stay unchanged until the new PCE numbers are released.

ACH (inverted color): 11

Indexes: What is happening?

TA: Price Action, Trend, Momentum & Volume:
Weekly & Daily SPY, QQQ, and IWM

Technical Analysis:

• Price (SMAs & Cloud): Weekly: SPY is trending lower towards its 20W SMA, QQQ found support at the same level, and IWM broke below it. Daily: SPY is bouncing betwee 20D and 50D SMAs, while QQQ is bounding between the 20D, 50D, and 100D SMAs. IWM broke below the 100D SMA. ACH: 2

• Trend (ADX): Weekly: ADX weak and trend-less for SPY and QQQ, while bearish trend starts to dominate in IWM. Daily: ADX for SPY and QQQ is very weak and IWM is in a strong bearish trend. ACH: 2

• Momentum (MACD): Weekly: All markets are rolling over their distribution phase into a downturn. Daily: All in bearish divergences. ACH: 3

• Volume (MFI): Weekly: All indices have bearish divergences. Daily: SPY, QQQ, and IWM have no clear signals with a flat MFI. ACH: 3

Breadth: % Stocks above SMAs

Above 200 Daily SMA

Above 20, 50, and 200 Daily SMAs vs. RSP

Analysis: % of stocks above their 200D SMAcrossed below the signal line. Both 20D and 50D %s are below the 50% middle line.
ACH: 3

Volatility: Ratio Low Vol. Stocks / SPY vs. RSP & SPY

Analysis: Ratio remains above the signal line (50D SMA) and this past week has even increased its upper trend.

Note: This divergence between the volatility signal and RSP and SPY has already occurred before, for example between May and July 2024 or between December 20024 and February 2025. We can interpret with this divergence that the current bearish trend in the markets could increase in case this signal reverses its bullish trend. Until then, we shall see the current drop in the markets as shallow and short-lived.

ACH: 10

Volatility: (Inverted) VIX vs. SPY

Note: This chart is mainly to detect extreme volatility situations that, once they reverse, offer great long opportunities in the market.

Analysis: Inverted VIX crossed below its moving average and may signal the start of a volatility increase. I’m setting the ACH to 1 from the previous value of 12.
ACH: 1

Options: (Inverted) Put/Call Ratio vs. SPY

Analysis: Almost no change in P/C ratio compared to last week.
ACH: 11

Options: Gamma Exposure – SPY

Analysis: Negative GEX for the rest of the year with a strong GEX for next opex Friday. Upper and lower GEX walls moved downwards.
Upper wall(s): 775
Lower wall(s): 750

Sectors: Where is it happening?

Sectors Rotation

Summary:

Last Word

Last week, we saw the downturn coming and finally this week the downturn appeared. Friday recovered some of the lost territory but one isolated day will not turn a trend that easily. The market is giving us plenty of signals that the bearish pressure will remain for the time being.

Disclaimer: The content on AMAT Investing is strictly for educational and learning purposes. The author is not a licensed financial advisor and holds no formal financial education. This post does not constitute professional financial advice. All investing involves risk of loss. Always conduct your own research and consult a licensed professional before making any investment decisions.

1. Cybersecurity

2. Clean Energy

3. Humanoid Robots

4. Semiconductors

5. Space Economy

6. Quantum Computing

7. Biotech

Check each ETF’s details in the themed portfolios section: https://www.amatinvesting.com/i/197172691/the-world-of-tomorrow-portfolio

Disclaimer: The content on AMAT Investing is strictly for educational and learning purposes. The author is not a licensed financial advisor and holds no formal financial education. This post does not constitute professional financial advice. All investing involves risk of loss. Always conduct your own research and consult a licensed professional before making any investment decisions.

Economic Production: ISM PMI vs. SPX

Analysis: US ISM PMI followed Chicago’s PMI. I’m lowering ACH from 9 to 8.
ACH: 8

Economic Activity: Regional Banks Performance

Analysis: KRE uptrend has been broken. Last week’s action seems that could mark a higher low. We will wait for a more clear vision to change the ACH.
ACH: 7

Interest Rates: FED, 2yr, 10yr, and 30yr Rates

Analysis: Flat week for rates still at high levels that can even go higher.
ACH (inverted color): 11

Indexes: What is happening?

TA: Price Action, Trend, Momentum & Volume:
Weekly & Daily SPY, QQQ, and IWM

Technical Analysis:

• Price (SMAs & Cloud): Weekly: All indices in an uptrend. Daily: SPY found support in the 20D SMA. QQQ crossed up and down both 20D and 50D SMAs. IWM broke below both 20D and 50D SMAs and found support in the 100D. ACH: 2

• Trend (ADX): Weekly: ADX strength very weak in all markets. Daily: ADX for SPY is very weak and for IWM is strong but towards a bearish trend. ACH: 2

• Momentum (MACD): Weekly: SPY at 12 o’clock, QQQ at 2 o’clock, and IWM at 1 o’clock with a bearish divergence. Daily: All in bearish divergences. ACH: 3

• Volume (MFI): Weekly: All indices have bearish divergences. Daily: SPY and QQQ on downtrends. IWM has no clear signal. ACH: 3

Breadth: % Stocks above SMAs

Above 200 Daily SMA

Above 20, 50, and 200 Daily SMAs vs. RSP

Analysis: % of stocks above their 200D SMAcrossed below the signal line. Both 20D and 50D %s are below the 50% middle line.
ACH: 3

Volatility: Ratio Low Vol. Stocks / SPY vs. RSP & SPY

Analysis: Ratio remains above the signal line (50D SMA). We can see a bit of horizontal formation since the previous weeks.
ACH: 10

Volatility: (Inverted) VIX vs. SPY

Note: This chart is mainly to detect extreme volatility situations that, once they reverse, offer great long opportunities in the market.

Analysis: Low VIX readings in quite a flat trend. There is no much signal here.
ACH: 12

Options: (Inverted) Put/Call Ratio vs. SPY

Analysis: P/C ratio quite flat at high levels. I’m moving forward the clock to 11.
ACH: 11

Options: Gamma Exposure – SPY

Analysis: Price at GEX flipping point. More volume at higher levels than lower. Future contracts gamma quite compress with no expiration above 1.00B of net GEX.
Upper wall(s): 780 & 800
Lower wall(s): 760

Sectors: Where is it happening?

Sectors Rotation

Summary:

Last Word

Clear downturn coming which shall be seen as an opportunity to buy some nice deeps. We are still early though. Let the market give us the signal that the bottom is in. By now, what the market is telling us is that the downturn is coming…

Disclaimer: The content on AMAT Investing is strictly for educational and learning purposes. The author is not a licensed financial advisor and holds no formal financial education. This post does not constitute professional financial advice. All investing involves risk of loss. Always conduct your own research and consult a licensed professional before making any investment decisions.

The AMAT Clock is derived from the Wyckoff market cycle. Please read the full explanation here: AMAT Market Cycle Clock.

Using the AMAT Clock provides several advantages:

1. It provides a finite number of possibilities to define the current state of the market (maximum 12 possible positions), and eases the communication of your view on the market by simply saying at what hour you think the market is.

2. It establishes the 4 main phases to any market. It is at the bottom accumulating (around 6 o’clock); it is raising (around 9 o’clock); it is at the top distributing (around 12 o’clock); or it is falling (around 3 o’clock).

3. It gives an expected sequence of events where the market cycles from accumulation (6) to markup (9), then to distribution (12), after that to markdown (3), and finally into accumulation (6) so the cycle can repeat again.

From now on, I will replace all market outlooks with the AMAT Cycle Hour (ACH) which provides a better thinking framework than the rather simplistic Bullish or Bearish readings.

Context: Why is it happening?

Economic Production: ISM PMI vs. SPX

Analysis: Chicago’s PMI dropped sharply. This indicator is always a bit choppy but worth keeping an eye on it. Setting the AMAT Clock Hour (ACH) at 9 o’clock.
ACH: 9 o’clock

Economic Activity: Regional Banks Performance

Analysis: KRE uptrend has been broken. Setting the AMAT Clock Hour (ACH) to 2 o’clock.
ACH: 2 o’clock

Interest Rates: FED, 2yr, 10yr, and 30yr Rates

Analysis: Fed’s QE 2.0 didn’t work… this starts to get ugly… Setting the ACH to 11 o’clock but the color to blue as in the rates case the lower the better.
ACH (inverted color): 11 o’clock

Indexes: What is happening?

TA: Price Action, Trend, Momentum & Volume:
Weekly & Daily SPY, QQQ, and IWM

Technical Analysis:

• Price (SMAs & Cloud): Weekly: All indices in an uptrend. Daily: SPY found support in the 20D SMA. QQQ crossed up and down both 20D and 50D SMAs and even went below the Cloud. IWM was in a weak uptrend until Friday due to Fed’s comments. ACH: 2 o’clock

• Trend (ADX): Weekly: ADX strength very weak in all markets. Daily: ADX for SPY is very weak and for IWM is strong but towards a bearish trend. ACH: 2 o’clock

• Momentum (MACD): Weekly: SPY at 12 o’clock, QQQ at 2 o’clock, and IWM at 1 o’clock with a bearish divergence. Daily: All in bearish divergences. ACH: 3 o’clock

• Volume (MFI): Weekly: All indices have bearish divergences. Daily: SPY and QQQ on downtrends. IWM has no clear signal. ACH: 3 o’clock

Breadth: % Stocks above SMAs

Above 200 Daily SMA

Above 20, 50, and 200 Daily SMAs vs. RSP

Analysis: % of stocks above their 20D SMA crossed below level 50 and we can also see a bearish trend in the % of stocks above their 50D SMA. 200D SMA is still above the signal line but with a clear downtrend as well.
ACH: 2 o’clock (200D at 1 o’clock; 50D at 2 o’clock; 20D at 3 o’clock)

Volatility: Ratio Low Vol. Stocks / SPY vs. RSP & SPY

Analysis: Ratio remains above the signal line (50D SMA).
ACH: 9 o’clock

Volatility: (Inverted) VIX vs. SPY

Note: This chart is mainly to detect extreme volatility situations that, once they reverse, offer great long opportunities in the market.

Analysis: Low VIX readings in quite a flat trend. There is no much signal here.
ACH: 12 o’clock

Options: (Inverted) Put/Call Ratio vs. SPY

Analysis: P/C ratio uptrend continues.
ACH: 9 o’clock

Options: Gamma Exposure – SPY

Analysis: After evaluating GEX for many months, I realized that for us does not have any forecast ability beyond showing where the “option walls” are. So GEX will not have outlook not AMAT Cycle Hour.
Upper wall(s): 780 & 800
Lower wall(s): 760

Sectors: Where is it happening?

Sectors Rotation

Summary:

Last Word

About the US Rates
Those of us that follow the US market, living or not there, sometimes make the mistake to think that they are the only markets in the world. Zooming out, looking at other markets, can provide a much necessary perspective in times when we need to better understand market behaviour (or misbehaviour).

When it comes to US debt rates is worth to do the same. Raising long-term rates is not a unique event happening in the US but globally with the exception of China. Both UK and Australia have higher 30-year rates.

20 years of historical data:

10 years:

This does not reduces the severity of ever increasing debt and ever increasing debt repayment budget. Let’s say that misery loves company, and knowing that the US is not alone in this phenomenon provides some context to the actual situation.

The key question here is to know if rates increase because money prefers other areas of investment (AI, Biotech…), or increases due to the lack of trust in the issuing governments (does money trust China more than the US??)? Most probably the answer is ‘all of the above and more’, yet the question is in which percentages? growing at what speed? where is the ceiling? can the US do some sort of financial engineering to remediate this? We will see…

Disclaimer: The content on AMAT Investing is strictly for educational and learning purposes. The author is not a licensed financial advisor and holds no formal financial education. This post does not constitute professional financial advice. All investing involves risk of loss. Always conduct your own research and consult a licensed professional before making any investment decisions.

Economic Production: ISM PMI vs. SPX

Analysis: No changes since last week.
Outlook: Bullish

Economic Activity: Regional Banks Performance

Analysis: KRE uptrend continues.
Outlook: Bullish

Interest Rates: FED, 2yr, 10yr, and 30yr Rates

Analysis: The talk of the week with the surprise “no QE 2.0” announcement (vertical line in the second chart (daily 1-year). Little has changed, at least for now. We will see if the story will turn into evidence, and rates will start to go lower.
Outlook: Neutral

Indexes: What is happening?

TA: Price Action, Trend, Momentum & Volume:
Weekly & Daily SPY, QQQ, and IWM

Technical Analysis:

• Price (SMAs & Cloud): Weekly: All indices in an uptrend. Daily: All indices retraced this week but found support in short-term SMAs (20D & 50D). Outlook: Neutral

• Trend (Cloud & ADX): Weekly and Daily: ADX is showing mixed to bearish trends. Outlook: Neutral

• Momentum (MACD): Weekly: SPY and IWM have “toppy” formations. QQQ has bearish momentum. Daily: All in bearish divergences. Outlook: Bearish

• Volume (MFI): Weekly: All indices have bearish divergences. Daily: No clear signals in any index but indeed no bullish signals. Outlook: Bearish

Breadth: % Stocks above SMAs

Above 200 Daily SMA

Above 20, 50, and 200 Daily SMAs vs. RSP

Analysis: % of stocks above their 20D SMA crossed below level 50 and we can also see a bearish trend in the % of stocks above their 50D SMA.
Outlook: Neutral

Volatility: Ratio Low Vol. Stocks / SPY vs. RSP & SPY

Analysis: Ratio remains above the signal line (50D SMA).
Outlook: Bullish

Volatility: (Inverted) VIX vs. SPY

Note: This chart is mainly to detect extreme volatility situations that, once they reverse, offer great long opportunities in the market.

Analysis: Low VIX readings in quite a flat trend. There is no much signal here.
Outlook: Neutral

Options: (Inverted) Put/Call Ratio vs. SPY

Analysis: P/C ratio uptrend continues.
Outlook: Bullish

Options: Gamma Exposure – SPY

Analysis: Negative GEX with big walls at 760 and 800. As the current price is not far from the Gamma Flip level, I’m setting the outlook in Neutral.
Outlook: Neutral

Sectors: Where is it happening?

Sectors Rotation

XLB is about to break to ATHs.

XLU is having such a bearish trend. Funny to think how a couple of months ago there was plenty of experts in the media saying that utilities were the new AI play because of the need to transport the energy from where it is produced to the data centers. I guess it is a great story but the evidence is nowhere to be seen.

Summary:

Last Word

About the US government debt
During last Friday’s episode of “The Compound and Friends” a very interesting chart was shown containing the amount of US debt held “by the public” (i.e., US citizens):

As you can see, the majority of US debt is held by US citizens, meaning that all those interest payments go from the citizens to the government in taxes and back to the citizens as interest from the debt.

This is one of the main reasons why the US debt is not such a big problem (so far). The government is fueling their own economy through the issuance of debt.

You can watch more in YouTube:

Disclaimer: The content on AMAT Investing is strictly for educational and learning purposes. The author is not a licensed financial advisor and holds no formal financial education. This post does not constitute professional financial advice. All investing involves risk of loss. Always conduct your own research and consult a licensed professional before making any investment decisions.

Economic Production: ISM PMI vs. SPX

Analysis: No changes since last week.
Outlook: Bullish

Economic Activity: Regional Banks Performance

Analysis: KRE uptrend continues.
Outlook: Bullish

Interest Rates: FED, 2yr, 10yr, and 30yr Rates

Analysis: Inflation expectations are cooling down, yet long-term rates seem not to notice that much.
Outlook: Neutral

Indexes: What is happening?

TA: Price Action, Trend, Momentum & Volume:
Weekly & Daily SPY, QQQ, and IWM

Technical Analysis:

• Price (SMAs & Cloud): SPY and IWM broke to ATHs. Daily QQQ broke above the cloud upper level. Outlook: Bullish

• Trend (Cloud & ADX): All indexes with bullish trends. Outlook: Bullish

• Momentum (MACD): Daily MACDs are pointing to an uptrend. Weekly MACDs are not aligned with daily indicators, signaling a possible downtrend or short-lived uptrend. Outlook: Neutral (due to Weekly readings)

• Volume (MFI): Daily readings are bullish but weekly readings seem to be forming a bearish divergence. Outlook: Neutral

Outlook: Neutral to Bullish

Breadth: % Stocks above SMAs

Above 200 Daily SMA

Above 20, 50, and 200 Daily SMAs vs. RSP

Analysis: All indicators show a bullish trend.
Outlook: Bullish

Volatility: Ratio Low Vol. Stocks / SPY vs. RSP & SPY

Analysis: Ratio remains above the signal line (50D SMA).
Outlook: Bullish

Volatility: (Inverted) VIX vs. SPY

Note: This chart is mainly to detect extreme volatility situations that, once they reverse, offer great long opportunities in the market.

Analysis: With the recent market uptrend, the VIX dropped to the level 15 and the trend remains very stable since May.

Options: (Inverted) Put/Call Ratio vs. SPY

Analysis: P/C ratio uptrend continues.
Outlook: Bullish

Options: Gamma Exposure – SPY

Analysis: We are in positive GEX territory. There is a big drop on GEX after next Friday’s 21st expiration day. Next weekend GEX per contract chart will be interesting.
Outlook: Bullish

Sectors: Where is it happening?

Sectors Rotation

Summary:

Last Word

Market conditions are improving and markets are reaching new all time highs (SPY and IWM). Technology is in recovery mode and has turned around it lagging relative performance that started mid June and bottomed late July (chart below). If the Technology sector can lead against, we can see that SPY 8,000 level reached sooner than expected. The only area of concern that we see is that big drop on positive GEX after Friday the 21st of August. As always the market will send us signals somewhere. I hope we are not near the edge of a cliff.

QQQ relative performance vs. VTI, SPY, and IWM:

Disclaimer: The content on AMAT Investing is strictly for educational and learning purposes. The author is not a licensed financial advisor and holds no formal financial education. This post does not constitute professional financial advice. All investing involves risk of loss. Always conduct your own research and consult a licensed professional before making any investment decisions.

Economic Production: ISM PMI vs. SPX

Analysis: Nice tick up on US ISM PMI. This is the bullish trend that we want to see in the economy to keep our optimistic outlook.
Outlook: Bullish

Economic Activity: Regional Banks Performance

Analysis: KRE uptrend continues.
Outlook: Bullish

Interest Rates: FED, 2yr, 10yr, and 30yr Rates

Analysis: The surprising weak job reports last Friday has cool down the probabilities of a rate hikes. It is still too soon to evaluate how this will impact rates, but at least is pulling them in the right direction, down.
Outlook: Neutral

Context: Why is it happening? Summary

Economic Production: Bullish
Economic Activity: Bullish
Interest Rates: Neutral

Indexes: What is happening?

TA: Price Action, Trend, Momentum & Volume:
Weekly & Daily SPY, QQQ, and IWM

Technical Analysis:

• Price (SMAs & Cloud): SPY well above all SMAs and Cloud. Daily QQQs just broke above the upper level in the cloud and all SMAs. IWM bounced off the cloud in the daily chart helped by both 20D and 50D SMAs.

• Trend (Cloud & ADX): All indexes with bullish trends.

• Momentum (MACD): Daily MACDs are pointing to an uptrend. Weekly MACDs are not aligned with daily indicators, signaling a possible downtrend or short-lived uptrend.

• Volume (MFI): Nice bullish divergence in daily SPY. Daily QQQ turned up. While daily IWM is quite flat.

Outlook: Neutral to Bullish

Breadth: % Stocks above SMAs

Above 200 Daily SMA

Above 20, 50, and 200 Daily SMAs vs. RSP

Analysis: All indicators show a bullish trend.
Outlook: Bullish

Volatility: Ratio Low Vol. Stocks / SPY vs. RSP & SPY

Analysis: Sharp increase in this very reliable indicator. We move directly from a bearish to a bullish outlook.
Outlook: Bullish

Volatility: (Inverted) VIX vs. SPY

Note: This chart is mainly to detect extreme volatility situations that, once they reverse, offer great long opportunities in the market.

Analysis: With the recent market uptrend, the VIX dropped to the level 15 and the trend remains very stable since May.

Options: (Inverted) Put/Call Ratio vs. SPY

Analysis: P/C ratio has sharply reversed upwards. This could bring some bullish action in the short-term.
Outlook: Bullish

Options: Gamma Exposure – SPY

Analysis: What a flip! GEX has gone from negative to positive in just one week action.
Outlook: Bullish

Indexes: What is happening? Summary

Technical Analysis: Neutral to Bullish
Breadth: Bullish
Volatility: Bullish
Options: Bullish

Sectors: Where is it happening?

Sectors Rotation

Summary:

Last Word

The velocity of this market is really high. Last week, we were coming from a weak July and we were expecting a weak entry into August. Instead, we had one of the best weeks in a long time, with S&P 500 reaching to new all time highs touching 7,800.

The strong US economy is resisting 2 wars, tariffs, “high” interest rates, DeepSeek moments, and even a hedge fund blowing off. Nothing seems to seriously impact this market. 8,000 there we go!

Disclaimer: The content on AMAT Investing is strictly for educational and learning purposes. The author is not a licensed financial advisor and holds no formal financial education. This post does not constitute professional financial advice. All investing involves risk of loss. Always conduct your own research and consult a licensed professional before making any investment decisions.

Economic Production: ISM PMI vs. SPX

Analysis: Slight increase on Chicago’s PMI.
Outlook: Bullish

Economic Activity: Regional Banks Performance

Analysis: KRE is clearly on an uptrend making new higher lows and higher highs.
Outlook: Bullish

Interest Rates: FED, 2yr, 10yr, and 30yr Rates

Analysis: Long-term rates increased this week when the Fed took the decision to not increase reference rates. I read plenty of news and experts saying that the Fed will be forced to raise, but when I check the period between 2009 to 2019, I see a big gap between long-term and reference rates. Only the 2-year rate seem to follow more the reference rate (or the other way around). Still, I cannot say that the current situation is bullish for the stock market, but I won’t say is bearish either.
Outlook: Neutral

Context: Why is it happening? Summary

Economic Production: Bullish
Economic Activity: Bullish
Interest Rates: Neutral

Indexes: What is happening?

Price Action, Trend & Momentum:
Weekly & Daily SPY, QQQ, and IWM

Analysis:
Weekly: The 3 indexes are at the start of the “markdown” Wyckoff stage. MACD just triggered the bearish signal, ADX confirms, and MFI is coming down from the highs. Nasdaq found support on the 20W SMA.
Daily: More neutral picture with MACD near the mid range. ADX confirming the end of the bearish trend. MFI signalling bullish pressure on the SPY, bounced off the lows in QQQ, and neutral on IWM. SPY and IWM found support on the upper end of the cloud, while QQQ found support at the bottom of the cloud.
Conclusion: We may see a relief rally on the daily but the weekly charts signal that more bearish pressure is still to come.
Wyckoff Stage: Markdown

Breadth: % Stocks above SMAs

Above 200 Daily SMA

Above 20, 50, and 200 Daily SMAs vs. RSP

Analysis: % stocks above their 200D and 50D remains elevated. 20D recovered and then went sharply down in the last two sessions.
Outlook: Broadening.

Volatility: Ratio Low Vol. Stocks / SPY vs. RSP & SPY

Analysis: The ratio bounced and sharply raised towards its 50D SMA. We are still bearish but it is a good sign to see this rapid recovery.
Outlook: Bearish

Volatility: VIX vs. RSP & SPY

Note: This chart is mainly to detect extreme volatility situations that, once they reverse, offer great long opportunities in the market.

Analysis: VIX sharply dropped this week, breaking the upward trend for the last two weeks.

Options: (Inverted) Put/Call Ratio vs. SPY

Analysis: P/C ratio continues its downward trend, as predicted. We will remain bearish until we don’t see this ratio improving.
Outlook: Bearish

Options: Gamma Exposure – SPY

Analysis: GEX has improved from last week but still there is a great negative pressure going into August expiration.
Outlook: Bearish

Indexes: What is happening? Summary

Price, Trend & Momentum: Markdown
Breadth: Broadening
Volatility: Bearish
Options: Bearish

Sectors: Where is it happening?

Sectors Rotation

Analysis: XLV and XLF are trying to break to new ATHs. XLK offers a good entry point from its Bullish Percentage perspective

SPX Pct. Bullish Indicator shows us a Bullish Outlook.

Scanners: Scanning for opportunities

S&P500 and Nasdaq New Highs in Leading Sectors

Descriptive
Index: S&P 500 and Nasdaq | Market Cap.: +Mid (+$2B) | Option/Short: Yes/Yes
Avg. Volume: >1M | Price: >$10
(order by Market Cap desc.)
Technical
50-Day New High

Last Word

Moving into August, know as one of the weakest months, and coming from a quite negative July, we may have a bit of a relief rally at some point.

The Stock Trader’s Almanac shows us the following seasonality for August 2026:

And for midterm years:

I hope 2026 follows the green pattern, with the market topping in June and bottoming mid-August, before it goes into a strong rally.

StockCharts.com shows us the following accumulated seasonality for the last 10 years:

By this chart, we have in front of us the worse two months of the year. Or if you prefer, the best two months of the year to buy into your portfolio at a great sale prices.

Disclaimer: The content on AMAT Investing is strictly for educational and learning purposes. The author is not a licensed financial advisor and holds no formal financial education. This post does not constitute professional financial advice. All investing involves risk of loss. Always conduct your own research and consult a licensed professional before making any investment decisions.

Due to my professional experience, I like thinking in frameworks or mental models. They provide me with the foundational principles to guide my thinking processes, methods, and routines. To come up with these frameworks, I like to question everything, to deconstruct the problem to its essence, and check the hidden assumptions that we, sometimes involuntarily, make.

When it comes to the Stock Market, I believe that the first, and one of the major, assumptions is to think about the act of “trading shares of public companies in an open exchange” is similar to a market. Yes, I do not agree with the word market. I prefer think about trading and investing more as a the Stock Relay Races or, for short, the Stock Races.

Once you think about the investing and trading as relay races, it is more natural to reach to the conclusion that “The Secret of Trading” is “buy high and sell higher”. You can read about my thoughts in this short page in my site:

And now let’s do the weekly review.

Context: Why is it happening?

Economic Production: ISM PMI vs. SPX

Analysis: No changes since last week.
Outlook: Bullish

Economic Activity: Regional Banks Performance

Analysis: KRE weekly Money Flow has a bearish divergence more clearly seen in the daily chart, where we also see that the trend is losing strength in ADX. Momentum in the daily chart is also showing a bearish divergence between MACD and price. All of this indicates near-term bearish forces but we shall still be confident on the long-term bullish trend that remain well in place in both weekly and daily charts.
Outlook: Bullish

Interest Rates: FED, 2yr, 10yr, and 30yr Rates

Analysis: Strong uptick in all interest rates. Zooming further out, we haven’t seen these 30Y levels since 2007.
Outlook: Neutral

Context: Why is it happening? Summary

Economic Production: Bullish
Economic Activity: Bullish
Interest Rates: Neutral

Market: What is happening?

Price Action: Weekly & Daily SPY, QQQ, and IWM

Analysis: All three index are in clear downtrends confirmed by ADX and Moving Averages, bear momentum by MACD, and under selling pressure volumes as seen in the MFI indicator.
Wyckoff Stage: Distribution

Breadth: % Stocks above SMAs

Above 200 Daily SMA

Above 20, 50, and 200 Daily SMAs vs. RSP

Analysis: % stocks above their 200D and 50D remains elevated. 20D numbers reflect the current downtrends in the indexes.
Outlook: Broadening.

Volatility: Ratio Low Vol. Stocks / SPY vs. RSP & SPY

Analysis: The bearish signal is clear now with the ratio falling further away from its 50D SMA.
Outlook: Bearish

Volatility: VIX vs. RSP & SPY

Note: This chart is mainly to detect extreme volatility situations that, once they reverse, offer great long opportunities in the market.

Analysis: VIX bounce back up to the 19 level. Elevated volatility shall be expected if the observed price trends continue bearish.

Options: (Inverted) Put/Call Ratio vs. SPY

Analysis: P/C ratio continues its downward trend, as predicted. We will remain bearish until we don’t see this ratio improving.
Outlook: Bearish

Options: Gamma Exposure – SPY

Analysis: GEX in clear negative territory with negative outlook for August.
Outlook: Bearish

Market: What is happening? Summary

Price Action: Distribution (Bearish trend, momentum, and money flow)
Breadth: Broadening
Volatility: Bearish
Options: Bearish

Sectors: Where is it happening?

Sectors Rotation

Analysis: Focus on XLV and XLF for mid- to long-term opportunities. XLE is heavily influenced by Iran’s war and oil’s price.

SPX Pct. Bullish Indicator shows us a Bullish Outlook.

Scanners: Scanning for opportunities

S&P500 and Nasdaq New Highs in Leading Sectors

Descriptive
Index: S&P 500 and Nasdaq | Market Cap.: +Mid (+$2B) | Option/Short: Yes/Yes
Avg. Volume: >1M | Price: >$10
(order by Market Cap desc.)
Technical
50-Day New High

XLV: Healthcare:

None

XLF: Financials:

Disclaimer: The content on AMAT Investing is strictly for educational and learning purposes. The author is not a licensed financial advisor and holds no formal financial education. This post does not constitute professional financial advice. All investing involves risk of loss. Always conduct your own research and consult a licensed professional before making any investment decisions.

Last week, I had the privilege to take some days off in Greece and spend quite a bit of hours reading and taking notes from this amazing book. As a result, I will update my weekly reviews and other areas of AMAT Investing. Learning and adapting to changes is a great way to improve and as long as I don’t see that Ferrari on the driveway… there is room for improvement :)

One of the ideas that I refreshed during my reading, is the Wyckoff Market Cycle: https://www.wyckoffanalytics.com/wyckoff-method/

According to Wyckoff, the market can be understood and anticipated through detailed analysis of supply and demand, which can be ascertained from studying price action, volume and time. As a broker, he was in a position to observe the activities of highly successful individuals and groups who dominated specific issues; consequently, he was able to decipher, via the use of what he called vertical (bar) and figure (Point-and-Figure) charts, the future intentions of those large interests. An idealized Wyckoff schematic of how he conceptualized the large interests’ preparation for and execution of bull and bear markets is depicted in the figure above. The time to enter long orders is towards the end of the preparation for a price markup or bull market (accumulation of large lines of stock), while the time to initiate short positions is at the end of the preparation for price markdown.

Context: Why is it happening?

Economic Production: ISM PMI vs. SPX

Analysis: No changes since last week.
Outlook: Bullish

Economic Activity: Regional Banks Performance

Analysis: KRE weekly stochastics and BB indicate that price is overbought. We had some correction last week but nothing major. Still the uptrend is clear.
Outlook: Bullish

Interest Rates: FED, 2yr, 10yr, and 30yr Rates

Analysis: Terms refuse to drop. The Fed may be forced to raise, which will certainly cool down the market. We prefer seeing those long and mid-term rates drop quickly.
Outlook: Neutral

Context: Why is it happening? Summary

Economic Production: Bullish
Economic Activity: Bullish
Interest Rates: Neutral

Market: What is happening?

Price Action: Cap. Weighted & Equal Weighted

Analysis: SPY is facing difficulties to advance while RSP continues its uptrend. Breadth is expanding into the broader market, while big-cap stocks are facing difficulties to advance. SPY fell below both 20D and 50D SMAs on Friday.
Wyckoff Stage: Distribution

Momentum: Stochastics and MACD

Analysis: Both indexes are having coming down from overbought territories.
Outlook: Bearish

Breadth: % Stocks above SMAs

Above 200 Daily SMA

Above 20, 50, and 200 Daily SMAs vs. RSP

Analysis: Breadth is expanding and we have room to run. We remain on bullish territory.
Outlook: Bullish

Volatility: Ratio Low Vol. Stocks / SPY vs. RSP & SPY

Analysis: This very reliable ratio seems bound to reverse the bearish signal into a bullish one.
Outlook: Bearish

Volatility: VIX vs. RSP & SPY

Note: This chart is mainly to detect extreme volatility situations that, once they reverse, offer great long opportunities in the market.

Analysis: VIX entering the bullish 15 level area.

Options: (Inverted) Put/Call Ratio vs. SPY

Analysis: Low spot reading (gray) which will push lower the signal (black) line, and the market with it.
Outlook: Bearish

Options: Gamma Exposure – SPY

Analysis: GEX in clear negative territory with negative outlook for August.
Outlook: Bearish

Market: What is happening? Summary

Price Action: Distribution
Momentum: Bearish
Breadth: Bullish
Volatility: Bearish
Options: Bearish

Sectors: Where is it happening?

Sectors Rotation

Analysis: Focus on XLV and XLF for mid- to long-term opportunities. XLE is heavily influenced by Iran’s war and oil’s price.

SPX Pct. Bullish Indicator shows us Bullish Outlook.

Scanners: Scanning for opportunities

S&P500 and Nasdaq New Highs in Leading Sectors

Descriptive
Index: S&P 500 and Nasdaq | Market Cap.: +Mid (+$2B) | Option/Short: Yes/Yes
Avg. Volume: >1M | Price: >$10
(order by Market Cap desc.)
Technical
50-Day New High

XLV: Healthcare:

XLF: Financials:

XLE: Energy

Disclaimer: The content on AMAT Investing is strictly for educational and learning purposes. The author is not a licensed financial advisor and holds no formal financial education. This post does not constitute professional financial advice. All investing involves risk of loss. Always conduct your own research and consult a licensed professional before making any investment decisions.

Comment: SPY found support in both 20D and 50D SMAs and seems ready to tackle new highs again soon. Interestingly, neither DIA, QQQ, nor IWM are in the same pattern. These 3 indexes have found support on their shorter SMAs but they are not in the position to take out previous highs. Just be looking at these correlations we could think that breadth is expanding as something else than technology and the big names is supporting the SPY.

Level 1: Why is it happening?

Economic Data: Production: ISM PMI vs. SPX

Analysis: No changes since last week.
Current Situation: Bullish
Future Outlook: Bullish

Economic Data: Activity: Regional Banks Performance

Analysis: KRE weekly stochastics and BB indicate that price is overbought. We had some correction last week but nothing major. Still the uptrend is clear.
Current Situation: Bullish
Future Outlook: Bullish

Interest Rates: FED, 2yr, 10yr, and 30yr Rates

Analysis: Terms refuse to drop. The Fed may be forced to raise, which will certainly cool down the market. We prefer seeing those long and mid-term rates drop quickly.
Current Situation: Bearish
Future Outlook: Neutral

Context Investors Sentiment: Credit Spreads

Note: Credit spreads move in tandem with the S&P, but when they diverge, that’s often an early warning signal.

Analysis: Spreads continue their uptrend after a bit of correction during June.
Current Situation: Bullish
Outlook: Bullish

Level 1: Why is it happening? Summary

Economic Data: Bullish/Bullish
Interest Rates: Bearish/Neutral
Investors Sentiment: Bullish/Bullish

Level 2: What is happening?

Price Action: SPX – Long Trend – 20 & 10 years

Analysis: Price continues the ascend above both 20Y and 10Y channels, which historically precedes a downturn at some point. Despite the current situation is bullish, our future outlook must remain bearish
Current Situation: Bullish
Future Outlook: Bearish

Price Action: RSP – Trend – Weekly & Daily

Analysis: Daily prices found support in the 20D SMA and the bullish trends continues. Indicators still show overbought conditions, so we keep our bullish current situation and bearish future outlook ratings.
Current Situation: Bullish
Future Outlook: Bearish

Breadth: RSP vs. SPY relative performance

Analysis: Ratio (black) decreased and seemed have formed a local top. This could mean the return of breadth contraction with the big market cap stocks taking the lead again.
Current Situation: Expansion to Contraction
Future Outlook: Contraction

Breadth: % Stocks above SMAs vs. RSP

Above 200 Daily SMA

Above 20, 50, and 200 Daily SMAs

Analysis: Breadth is expanding and we have room to run. We remain on bullish territory.
Current Situation: Bullish
Future Outlook: Bullish

Breadth: New Highs vs. RSP & SPY

Analysis: Lower new highs yet far away from any extreme.
Current Situation: Bullish
Future Outlook: Bullish

Volatility: Ratio Low Vol. Stocks / SPY vs. RSP & SPY

Analysis: This very reliable ratio seems bound to reverse the bearish signal into a bullish one.
Current Situation: Bearish
Future Outlook: Bearish-to-Bullish

Volatility: VIX vs. RSP & SPY

Note: This chart is mainly to detect market bottoms.

Analysis: VIX entering the bullish 15 level area.
Current Situation: Bullish
Future Outlook: Neutral

Options: (Inverted) Put/Call Ratio vs. SPY

Analysis: Low spot reading (gray) which will push lower the signal (black) line, and the market with it.
Current Situation: Bearish
Future Outlook: Bearish

Options: Gamma Exposure – SPY

Analysis: GEX has flipped from negative to positive for 17th of July with the negative GEX moving to mid-August. Surprises late-September high positive readings.
Current Situation: Bullish
Future Outlook: Bullish (looking at September)

Level 2: What is happening? Summary

Price Action: Bearish/Bearish
Breadth: Bullish/Bullish
Volatility: Bullish/Bearish
Options: Neutral/Neutral

Level 3: Where is it happening?

Bulls vs. Bears: RSP vs. RSPD (Cons. Disc. – Bulls) and RSPS (Cons. Sta. – Bears)

Analysis: Ratio (yellow) failed to break above the 200D SMA and also broke below the 50D SMA.
Current Situation: Bearish
Future Outlook: Bearish

Sectors Rotation

Sectors Performance

Forget XLE where everything is about Iran’s war. The true star is XLI. If only we could see XLF breaking to new highs, that could be the final confirmation of a healthy market diversification and bull market.

Transportation (XTN) is breaking to ATH. Old time technicians used this sector to tell the overall health of the economy. Is still a good indicator in the digital era? We’ll see…

Sectors Bullish Percent Index

Growth Sectors

Value Sectors

Note: Any sectors below their red levels are good opportunities to find great companies at good valuations or buy sector ETFs (buy cheap). Those sectors above their Green levels are candidates to be sold (sell expensive).

Current Situation: Bullish - & - Future Outlook: Bullish:
Industrials, Materials, Financials, Utilities, Technology

Current Situation: Bullish - & - Future Outlook: Bearish:
Healthcare, C. Disc., Real Estate

Current Situation: Bearish - & - Future Outlook: Bullish:
C.Staples, Energy

Current Situation: Bearish - & - Future Outlook: Bearish:
Communications

SPX has a Bullish Current Situation and a Bullish Future Outlook.

Note: XLK moved to have both bullish current conditions and future outlook.

Level 3: Where is it happening? Summary

Bulls vs. Bears: Bearish

All Levels Summary and Final Thoughts

Level 1 Summary - The Why

Economic Data: Bullish/Bullish
Interest Rates: Bearish/Neutral
Investors Sentiment: Bullish/Bullish

Level 2 Summary - The What

Price Action: Bearish/Bearish
Breadth: Bullish/Bullish
Volatility: Bullish/Bearish
Options: Neutral/Neutral

Level 3 Summary - The Where

Bulls vs. Bears: Bearish

Level 4: Scanning for opportunities

Great Companies with Great Technicals

Descriptive
Index: Any | Market Cap.: +Mid (+$2B) | Option/Short: Yes/Yes
Avg. Volume: >1M | Relative Vol.: Over 1 | Price: >$10
Fundamental
EPS Growth Next Year: >15% | EPS Growth Past 3 Years: >5% | Sales Growth Past 3 Years: >5%
- Sorted by P/E
Technical
Performance: Quarter Up | Price above 20D SMA & 50D SMA | Beta: >1 | ATR: > 1

None!

S&P500 and Nasdaq New Highs

Descriptive
Index: S&P 500 and Nasdaq | Market Cap.: +Mid (+$2B) | Option/Short: Yes/Yes
Avg. Volume: >1M | Price: >$10
(order by Market Cap desc.)
Technical
50-Day New High

Chart of the week:

Railroads! You hear it here first. All that construction and industry production has to move somehow.

Disclaimer: The content on AMAT Investing is strictly for educational and learning purposes. The author is not a licensed financial advisor and holds no formal financial education. This post does not constitute professional financial advice. All investing involves risk of loss. Always conduct your own research and consult a licensed professional before making any investment decisions.

Comment: SPY rallied to rebound above the 50D and 20D SMA levels. Looking at the DIA, QQQ, and IWM charts we see that the play at hand is the rotation out from QQQ into more “traditional” assets in DIA and IWM. QQQ bounced out of the 50D SMA and broke above the 20D to fall back below it again on Thursday (last trading day). The 50D SMA supported the index, at least for now.

Level 1: Why is it happening?

Economic Data: Production: ISM PMI vs. SPX

Analysis: Mute evolution of US PMI, yet on a bullish trend with room to run.
Current Situation: Bullish
Future Outlook: Bullish

Economic Data: Production: Dallas & Philadelphia Manufacturing vs. SPX

Analysis: No updates since last week.
Current Situation: Neutral
Future Outlook: Bullish

Economic Data: Activity: Regional Banks Performance

Update: I’m replacing the Consumer Sentiment indicator by the Regional Banks ETF performance. As the Consumer Sentiment is highly politicized, as it is based on opinions, I prefer to look at the performance of the regional banks, which are the ones carrying small & medium business credits. The correlation of the YoY% change of the KRE ETF maps the S&P and IWM performance quite closely.

If we look at KRE price chart we see a clear uptrend:

In the weekly chart, I would like to see a breakout above previous ATH and a firm consolidation above $80. Stochastics indicate that we may need to wait a while for that to happen, while MACD seems to confirm the future ATH.

Analysis: KRE performance fuels both SPY and IWM performance, and I see a bullish trend in KRE that could even accelerate once previous ATH are surpassed.
Current Situation: Bullish
Future Outlook: Bullish

Interest Rates: FED, 2yr, 10yr, and 30yr Rates

Analysis: Terms refuse to drop. The Fed may be forced to raise, which will certainly cool down the market. We prefer seeing those long and mid-term rates drop quickly.
Current Situation: Bearish
Future Outlook: Neutral

Context Investors Sentiment: Credit Spreads

Note: Credit spreads move in tandem with the S&P, but when they diverge, that’s often an early warning signal.

Analysis: Spreads have turned lower, aligned with market’s price action.
Current Situation: Bearish
Outlook: Bearish

Level 1: Why is it happening? Summary

Economic Data: Bullish/Bullish
Interest Rates: Bearish/Neutral
Investors Sentiment: Bearish/Bearish

Level 2: What is happening?

Price Action: SPX – Long Trend – 20 & 10 years

Analysis: Price inside the 10Y channel and finding resistance. The 20Y channel is still quite far down (circa 7,200 area). We can expect prices to coast along the upper side of the channel or even trending towards the middle (Weekly 50 SMA).
Current Situation: Bearish
Future Outlook: Bearish

Price Action: RSP – Trend – Weekly & Daily

Analysis: The equal weight market is telling such a different story from the market cap. weight. RSP continue on a bullish trend breaking to ATHs this week. The current situation is bullish but weekly RSI and PPO are near overbought values. Also, price is over-extended relative to its 20 SMA. For these reasons, my outlook is bearish (correction).
Current Situation: Bullish
Future Outlook: Bearish (correction)

Breadth: RSP vs. SPY relative performance

Analysis: RSP (green) vs. SPY (blue) ratio (black) increased, meaning we are in a “Breadth Expansion” situation with an outlook of “Expansion” as per the 20D SMA slope.
Current Situation: Expansion
Future Outlook: Expansion

Breadth: % Stocks above SMAs vs. RSP

Above 200 Daily SMA

Above 20, 50, and 200 Daily SMAs

Analysis: Breadth is expanding and we have room to run. We remain on bullish territory.
Current Situation: Bullish
Future Outlook: Bullish

Breadth: New Highs vs. RSP & SPY

Analysis: Last week’s local top impacted only SPY. RSP continues its bullish rally. The new highs signal is a bullish trend with still room to rally.
Current Situation: Bullish
Future Outlook: Bullish

Volatility: Ratio Low Vol. Stocks / SPY vs. RSP & SPY

Analysis: This very reliable ratio have just triggered the bearish signal.
Current Situation: Bearish
Future Outlook: Bearish

Volatility: VIX vs. RSP & SPY

Note: This chart is mainly to detect market bottoms.

Analysis: VIX quickly drop from level 20.
Current Situation: Bullish
Future Outlook: Neutral

Options: (Inverted) Put/Call Ratio vs. SPY

Analysis: Low spot reading (gray) which will push lower the signal (black) line, and the market with it.
Current Situation: Bearish
Future Outlook: Bearish

Options: Gamma Exposure – SPY

Analysis: Open interest GEX is negative with the last support at 720. July the 17th has the most negative GEX accumulation.
Current Situation: Bearish
Future Outlook: Bearish

Level 2: What is happening? Summary

Price Action: Bearish/Bearish
Breadth: Bullish/Bullish
Volatility: Bullish/Bearish
Options: Bearish/Bearish

Level 3: Where is it happening?

Bulls vs. Bears: RSP vs. RSPD (Cons. Disc. – Bulls) and RSPS (Cons. Sta. – Bears)

Analysis: Ratio (yellow) failed to break above the 200D SMA and also broke below the 50D SMA.
Current Situation: Bearish
Future Outlook: Bearish

Sectors Rotation

Sectors Performance

Healthcare (XLV) has been this week’s star and is about to break out of a long-term high. Industrials (XLI) continue with the bullish trend. Energy (XLE) is feeling the pain from the Iran war ceasefire. Both Communications (XLC) and Technology (XLK) are dragging the main indexes down.

Transportation (XTN) is breaking to ATH. Old time technicians used this sector to tell the overall health of the economy. Is still a good indicator in the digital era? We’ll see…

Sectors Bullish Percent Index

Growth Sectors

Value Sectors

Note: Any sectors below their red levels are good opportunities to find great companies at good valuations or buy sector ETFs (buy cheap). Those sectors above their Green levels are candidates to be sold (sell expensive).

Current Situation: Bullish - & - Future Outlook: Bullish:
Industrials, Materials, Financials, Utilities

Current Situation: Bullish - & - Future Outlook: Bearish:
Healthcare, C. Disc., Real Estate

Current Situation: Bearish - & - Future Outlook: Bullish:
C.Staples, Energy

Current Situation: Bearish - & - Future Outlook: Bearish:
Technology, Communications

SPX has a Neutral Current Situation and a Neutral Future Outlook.

Level 3: Where is it happening? Summary

Bulls vs. Bears: Bearish

All Levels Summary and Final Thoughts

Level 1 Summary - The Why

Economic Data: Bullish/Bullish
Interest Rates: Bearish/Neutral
Investors Sentiment: Bearish/Bearish

Level 2 Summary - The What

Price Action: Bearish/Bearish
Breadth: Bullish/Bullish
Volatility: Bullish/Bearish
Options: Bearish/Bearish

Level 3 Summary - The Where

Bulls vs. Bears: Bearish

Level 4: Scanning for opportunities

Great Companies with Great Technicals

Descriptive
Index: Any | Market Cap.: +Mid (+$2B) | Option/Short: Yes/Yes
Avg. Volume: >1M | Relative Vol.: Over 1 | Price: >$10
Fundamental
EPS Growth Next Year: >15% | EPS Growth Past 3 Years: >5% | Sales Growth Past 3 Years: >5%
- Sorted by P/E
Technical
Performance: Quarter Up | Price above 20D SMA & 50D SMA | Beta: >1 | ATR: > 1

S&P500 and Nasdaq New Highs

Descriptive
Index: S&P 500 and Nasdaq | Market Cap.: +Mid (+$2B) | Option/Short: Yes/Yes
Avg. Volume: >1M | Price: >$10
(order by Market Cap desc.)
Technical
50-Day New High

Chart of the week:

Crowdstrike for being a company that benefits from AI but is not an AI play. CRWD has a unique way to participate in the cyber security market with their innovative offering. CRWD is indeed an “world of tomorrow” portfolio (coming soon) stock.

Disclaimer: The content on AMAT Investing is strictly for educational and learning purposes. The author is not a licensed financial advisor and holds no formal financial education. This post does not constitute professional financial advice. All investing involves risk of loss. Always conduct your own research and consult a licensed professional before making any investment decisions.

Comment: SPY felt not only below its 20D but as well under the 50D SMA. QQQ held above its 50D but also broke below the 20D. Meanwhile DIA and IWM are helding their bullish trends. Interesting to see that high inflation expectations are not impeding IWM advancement. Economic growth is winning over inflation.

As we pointed out last week, the market was sending signals for correction (mainly looking at the options market and volatility signals) and we are finally seeing that. Breadth is expanding, seen by the different performance in SPY and QQQ vs. DIA and IWM. So, tech is taking a break for the summer and letting the other parts of the market take the lead.

Level 1: Why is it happening?

Economic Data: Production: ISM PMI vs. SPX

Analysis: No changes since last week.
Current Situation: Bullish
Future Outlook: Bullish

Economic Data: Production: Dallas & Philadelphia Manufacturing vs. SPX

Analysis: Philadelphia’s reading improved and puts back our bullish future outlook.
Current Situation: Neutral
Future Outlook: Bullish

Economic Data: Consumption: Consumer Sentiment

Analysis: Another drop in this highly politically bias indicator. Yet, high energy prices and overall high prices are making nobody happy.
Current Situation: Bearish
Future Outlook: Bullish

Interest Rates: FED, 2yr, 10yr, and 30yr Rates

Analysis: Long term rates had a bearish reversal due to the end of Iran’s war. If “the deal” holds, energy prices shall drop, which will impact inflation, and possibly distance the Fed from raising rates.
Current Situation: Bearish
Future Outlook: Neutral

Context Investors Sentiment: Credit Spreads

Note: Credit spreads move in tandem with the S&P, but when they diverge, that’s often an early warning signal.

Analysis: Spreads have turned lower, aligned with market’s price action.
Current Situation: Bearish
Outlook: Bearish

Level 1: Why is it happening? Summary

Economic Data (long-term): Bullish/Bullish
Interest Rates: Bearish/Neutral
Investors Sentiment: Bearish/Bearish

Level 2: What is happening?

Price Action: SPX – Long Trend – 20 & 10 years