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 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.