The U.S. market is in a Confirmed Uptrend.The S&P 500 and Nasdaq pulled back yesterday, picking up a third and second distribution day, respectively. Overall, the distribution day count still remains low and both indices continue to hold above 200-DMA support. We will be more concerned should distribution begin to cluster, resulting in a break below moving-average support.
Symbol: CREE
Strategy View
Guidance from S&P 500 companies during the Q4 2018 earnings release season revealed a stark change in trend for U.S. stocks. Even though actual results for this quarter sustained recent growth trends and positive earnings surprises,
forward guidance for Q1 2019 was significantly less than pre-earnings season expectations. As a result, median S&P 500 estimates for the current quarter call for a sharp deceleration from 14% earnings growth in Q4 2018 to
just 4% in Q1 2019.
WON Global View
The U.S. market is in a Confirmed Uptrend. The S&P 500 and Nasdaq staged upside reversals yesterday, finding support at their respective 10-DMA to close relatively flat for a second straight session. Distribution remains low at two days on the S&P 500 and one on the Nasdaq.
WON Global View
The U.S. market is in a Confirmed Uptrend. The S&P 500 and Nasdaq traded relatively flat yesterday, consolidating in lower volume. Support remains the 200-DMA.
WON Global View
The U.S. market is in a Confirmed Uptrend. The S&P 500 and Nasdaq gapped up into new year-to-date highs yesterday, before pulling back intraday and closing at the lows of the session. Should the indices pullback over the next few days following this churning action, look for support at the 200-DMA to hold.
WON Global View
The U.S. market is in a Confirmed Uptrend. The S&P 500 and Nasdaq continue to trade constructively above their respective 200-DMA with a low number of distribution days. Near-term resistance on the S&P 500 remains at 2,800, while the next level of resistance on the Nasdaq is 7,573.
Market View
One of the factors fueling the recent U.S. stock market rally from the December 2018 low are investors’ hopes
that 2019 will represent the trough year in U.S. corporate earnings growth. Q1 2019 projections for a 2% drop
in earnings could mark the low point, as Q2–Q4 earnings are expected to grow 1%, 2%, and 9% respectively. If
growth re-accelerates into 2020 after a trough in 2019, the precedent points to strong 2019 gains.
Bloomberg Intelligence Chief Equity Strategist Gina Martin Adams notes there have been 13 previous earnings
cycles for the S&P 500 since 1950. In 11 of 13 instances, in the trough years for earnings growth, the S&P 500
had positive returns with an average return of more than +10%.
We note the already above-average wave, that is, the current rally leg with no intermediate down leg of 5% or
more, is close to 20% gains off December lows. This uptrend may be pricing in the aforementioned trough, in
which case a short-term pause would be beneficial for further gains.
Breadth has been very strong (~75% of NYSE stocks are above their 30-WMA, and ~90% of S&P 500 stocks are
above their 50-DMA), a bullish signal for further gains. However, while this level of breadth is typical in big
bounces, it is not usually sustainable. In the recovery from the last two major corrections (2011, 2015–2016),
the market experienced a similar spike in breadth. During the subsequent pause/pullbacks, which each lasted
approximately two months, the amount of divergence between stocks increased (less breadth). Despite a more
clear separation of winners and losers, the market continued higher thereafter.
WON Global View
The U.S. market is in a Confirmed Uptrend. The S&P 500 and Nasdaq continue to consolidate gains, pulling back yesterday but again closing off intraday lows and avoiding distribution. Though there has been some near-term rotation, all 11 sectors are up over the last five sessions, with nine of 11 remaining at or above their respective 200-DMA. Leading ideas also continue to display positive technical action, digesting gains constructively. We remain positive on the general market as we have yet to see technical damage at the index, sector, or stock level despite what has been an above average rally without a 5% pullback. See last week’s strategy view here.
WON Global View
The U.S. market is in a Confirmed Uptrend. The S&P 500 and Nasdaq traded relatively flat yesterday, consolidating gains over the last
several sessions. Distribution remains at two days on the S&P 500 and one on the Nasdaq. Nine of 11 sectors remain above their
respective 200-DMA, though we are noticing early signs of rotation into Basic Material, Energy, and select Transports as Technology
digests gains.
WON Global View
The U.S. market is in a Confirmed Uptrend. The S&P 500 and Nasdaq continue to push higher with a low number of distribution days. We will now be looking for the 200-DMA to act as support should a pullback occur. Breadth remains strong, with nine of 11 O’Neil sectors now trading above their respective 200-DMA. Leadership continues to act well, with multiple ideas across numerous growth-oriented industry groups making new highs. We remain positive on the general market.
