The Market Forecast for the S&P 500 is showing a new strong near-term rally.
However, with this move, the reward-risk ratio gets even more skewed with risk to the downside as the gap between the 0% and 23% Fibonacci retracement levels getting more than 300 points wide.
The Russell 2000 is showing a far less bullish Market Forecast as its intermediate line is close to crossing below the 80th percentile.
RSI and DMI are showing extremely bullish patterns on the S&P 500 Index. The NASDAQ and S&P 500 are breaking above upper Bollinger Bands above one-year value area on Volume Profile.
The Russell 2000 is not even close to confirming that strength.
Volatility is showing compression and widening gaps with long-term implied volatility and historical volatility. This suggests a volatility spike is forthcoming soon.
Bond Yields are showing strong divergences with equities at that same time that tech stocks are outperforming against small cap stocks. Good chance yields catch up to equities as long-term momentum in tech stocks’ outperformance slows down. Otherwise, the only way these two major divergences resolve is with bear market.
Technology, Consumer Discretionary and Communication Services mask broader weakness in cyclical and economic-growth sensitive sectors for the past two weeks.
Stock Market Outlook Video
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