Weekly Review - 2026-June-05
Look who's back! (for a short while...)
Last Week’s Comment: Finally! The drop that we seen coming for the last few weeks seems that is finally here. Once this correction is over, we will have a better place to enter the market.
Level 1: Why is it happening?
Economic Data: Production: ISM PMI vs. SPX
Analysis: ISM PMI points higher and Chicago PMI sharply increased last week.
Outlook: (very) Bullish
Economic Data: Production: Dallas & Philadelphia Manufacturing vs. SPX
Analysis: No changes since last week.
Outlook: Neutral
Economic Data: Consumption: Consumer Sentiment
Analysis: No changes since last week.
Outlook: Neutral
Interest Rates: FED, 2yr, 10yr, and 30yr Rates
Analysis: Strong employment numbers have increased the probabilities of a rate hike by the Fed this year. US economy is so strong that rates are calling for an increase. Markets will price in this possibility rather quickly (a possible explanation for Friday’s drop), after that, expect a mute reaction is the hike ends up happening and a positive reaction if it doesn’t.
Outlook: Neutral
Context Investors Sentiment: Credit Spreads
Credit spreads move in tandem with the S&P, but when they diverge, that’s often an early warning signal.
Analysis: Spreads dived on Friday, mirroring the market. I’m downgrading the outlook from bullish to neutral.
Outlook: Neutral
Level 1: Why is it happening? Summary
Economic Data (long-term): Bullish
Interest Rates: Neutral
Investors Sentiment: Neutral
Level 2: What is happening?
Price Action: SPX – Long Trend – 20 & 10 years
Analysis: Price re-entered the 10Y channel. The 20Y channel is still quite far down (circa 7,200 area).
Outlook: Bearish
Price Action: RSP – Trend – Weekly & Daily
Analysis: Shooting star on the weekly chart right at the top and with a bearish divergence with RSI. In the daily chart we see how MACD is about to create a bearish cross at high levels. I’m downgrading the outlook from neutral to bearish.
Outlook: Bearish
Breadth & Volatility: % Stocks above SMAs vs. RSP
Above 200 Daily SMA
Above 20, 50, and 200 Daily SMAs
Analysis: Believe it or not… the amount of stocks above their MAs has increased since last week. This past week was bad for big names but good for the rest of the market. We remain bullish.
Outlook: Bullish
Breadth & Volatility: Bullish Pct. Index & McClellan Summation Index
Analysis: Both indicators continue in their bullish areas but pointing lower. Downgrading the outlook from bullish to neutral.
Outlook: Neutral
Breadth & Volatility: Ratio Low Volatility Stocks / SPY vs. SPY and RSP
Analysis: Sharp drop in this key signal. I’m downgrading the outlook from bullish to neutral-to-bearish
Outlook: Neutral-to-Bearish
Breadth & Volatility: New Highs vs. SPY & RSP
Analysis: Very low New Highs (grey line behind the yellow) with a downward trend (yellow). I’m leaving the outlook in neutral.
Outlook: Neutral
Breadth & Volatility: VIX vs. SPY & RSP
This chart is mainly to detect market bottoms.
Analysis: VIX shot from 15 to 21. We can see a similar scenario on last year’s October, where the pull back was very brief. I’m downgrading the outlook from bullish to bearish.
Outlook: Bearish
Options: (Inverted) Put/Call Ratio vs. SPY
Analysis: Last week we had an extreme P/C read (grey) and average at historically top highs and this week the market finally drop. I would like to see an extreme P/C on the other side to start getting bullish. I’m keeping the outlook as Bearish.
Outlook: Bearish
Options: Gamma Exposure – SPX
Analysis: Sharp GEX reversal from last week’s very positive to this week negative. I’m downgrading the outlook from bullish to bearish.
Outlook: Bearish
Level 2: What is happening? Summary
Price Action: Bearish
Breadth & Volatility: Neutral
Options: Bearish
Level 3: Where is it happening?
Bulls vs. Bears: RSP vs. RSPD (Cons. Disc. – Bulls) and RSPS (Cons. Sta. – Bears)
Analysis: Ratio (yellow) was about to make a bullish cross and turned around to continue in bearish territory.continues in bearish territory. I’m leaving the outlook in neutral.
Outlook: Neutral
Sectors Rotation
Market & Economy Rotation
US Sectors order by ISM PMI Correlation (between parenthesis)
Growth Sectors - shall outperform when the market is bullish:
XLK: Technology (71%)
XLY: Cons. Discretionary (67%)
XLI: Industrials (66%)
XLB: Basic Materials (66%)
XLF: Financials (59%)
Value Sectors - shall outperform when the market is bearish:
XLV: Healthcare (55%)
XLC: Communications (49%)
XLE: Energy (44%)
XLU: Utilities (35%)
XLP: Cons. Staples (30%)
XLRE: Real Estate (16%)
Analysis:
With a market moving at this speed is difficult to decide in which moment of the cycle we are. We know that the economy is improving from lower levels, so we could consider it “Early Recovery”. The market, after the noise brought by the Iran war, is signalling towards a Bull Market as we shall see Technology and Industrials leading.
Sectors Performance
In the US market, there is a predominant group above everything else, technology. As W. Buffet said, do not bet against America - so do not bet against technology.
Sectors Bullish Percent Index
Growth Sectors:
Value Sectors:
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).
Buy Opportunities: Utilities, Consumer Discretionary, Materials
Sell Opportunities: Real Estate
Level 3: Where is it happening? Summary
Bulls vs. Bears: Bearish
Market & Economy Rotation: Bull Market
All Levels Summary and Final Thoughts
Level 1 Summary - The Why
Economic Data (long-term): Bullish
Interest Rates: Neutral
Investors Sentiment: Neutral
Level 2 Summary - The What
Price Action: Bearish
Breadth & Volatility: Neutral
Options: Bearish
Level 3 Summary - The Where
Bulls vs. Bears: Bearish
Market & Economy Rotation: Bull Market
Level 4: Scanning for opportunities
Stock Screener for 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
And look who’s back for a short while:
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.