The NASDAQ Composite remains within striking distance of last week’s highs and all-time highs.
Minor concerns emerge from the churning action over the last two days, but that hasn’t taken away from the bullish near-term view.
As you can see on the chart, price has formed a narrowing wedge. Eyes on support and resistance for direction.
The Software ETF (IGV) pushed back to new highs while Technology has outperformed all other major sectors this week (despite much of this strength being large-cap in nature). The S&P Technology Sector (XLK) at current levels is set to make a new all-time weekly closing high (above February’s 101.96 weekly close).
Thus at 26% of the S&P 500 (SPX), Technology’s strength and/or lack of real failure remains one of the more important reasons to stick with this rally. If/When caution emerges, we should see it here as well. Follow the leader.
Broad Market Commentary
Heading into 2Q Quad expiration, we hear this could be the largest quarterly OPEX expiration ever, with more than a Trillion to expire. There remains huge open interest in S&P futures at 3100, or 16 points above, which could serve as a possible magnet for price.
Trends remain strongly bullish, despite a couple days of churning with indices all within striking distance of new highs. Technology has managed to continue to lead the charge, and with 26% weight in SPX as the largest sector, paying attention to things like XLK and IGV moving back to new all-time highs on a weekly close is considered to be a positive for stocks.
What’s interesting is that Healthcare has lagged sharply over the last couple months, yet, XBI , the Biotech ETF, just closed at new highs for the year, and when Healthcare turns up in earnest, like what’s expected into July, this should be a further positive influence on Equities, as Healthcare is the second largest sector by capitalization. So at present, stock indices are closing in on all-time highs again while Heatlhcare is largely not participating. Before a market peak in August, it looks likely that Healthcare joins Technology in strengthening and both can serve as factors that can buoy the market, for now.
Outside of this, we see the US Dollar has turned up even sharper in the short run above early week highs and likely follows-through higher into next week. This likely causes near-term pressure on commodities and Emerging markets, which likely lag as the US Dollar rallies. Metals, meanwhile, remain in consolidation, and have not sold off sharply but also are awaiting a time when the Dollar starts to turn back lower, which for now, still looks premature.
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Author has positions in mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.
