The U.S. market is in a Confirmed Uptrend. The S&P 500 and Nasdaq closed higher on below average volume and are sitting just below resistance at the 200-DMA (S&P 500: 2,741 (+0.1%); Nasdaq: 7,454 (+0.7%)). A low volume consolidation along the 200-DMA would be viewed as constructive as we would prefer to avoid any high-volume pullbacks off the 200-DMA.
Symbol: CREE
WON Global View
The U.S. market is in a Confirmed Uptrend. The S&P 500 and Nasdaq closed above their respective 100-DMA, and the next level of resistance is the 200-DMA (S&P 500: 2,741 (+0.9%); Nasdaq: 7,453 (+1.7%)). There remains little to no distribution and leading ideas continue to act well. We maintain our positive view on the general market.
WON Global View
The U.S. market is in a Confirmed Uptrend. The S&P 500 and Nasdaq rallied strongly last week and are now sitting just below their respective 100-DMA (S&P 500: 2,710 (+0.2%); Nasdaq: 7,281 (+0.2%)). We expect consolidation around current levels given the sharp rally into this next level of moving-average resistance. Look for the major averages to avoid any clustering of distribution and for leading ideas to remain technically intact. The rising 21-DMA may serve as support should a pullback occur. The next level of resistance above the 100-DMA is the 200-DMA (S&P 500: 2,741 (+1.3%); Nasdaq: 7,453 (+2.5%)). We continue to recommend buying quality high-relative-strength ideas as they emerge from consolidation.
Market View
O’Neil Market Strategy: S&P 500 earnings are decelerating, but the S&P’s P/E ratio has also fallen significantly
given rising 10-year yields. Considering the Fed’s pause, if yields continue to come off highs, P/E ratios could
see moderate expansion once again.
A 6% gain since the January 4 follow-through day on the S&P 500 lines up with the average of second follow-
through days that have led to extended bull markets in the past. The S&P 500’s 7% gain in January was only the
fifth time since 1970 when a 7% monthly loss was followed by a 7% monthly gain.
The four (1974, 1987, 2002, 2009) other instances ended prior bear markets, and one (2011) ended a large
market correction. Historically, once this precedent is established, forward gains are well above average for the
next six months. An S&P 500 gain of >5% in January (nine prior instances since 1970) similarly leads to a well
above average for the next six months.
Technical setups are much improved, with all indices and sectors above their respective 50-DMA. Tests of the
200-DMA are looming for sectors, and a majority remain more than 10% off highs.
The U.S. market is in a Confirmed Uptrend. The S&P 500 and Nasdaq rallied strongly this week and are now
sitting just below their respective 100-DMAs. We expect consolidation around current levels due to the sharp
rally into this next level of moving-average resistance. Look for major averages to avoid any clustering of
distribution and for leading ideas to remain technically intact.
Sectors: Since the follow-through day, six sectors have rallied more than 10%, with Transportation, Consumer
Cyclical, and Technology each rallying more than 13%. Though defensive sectors have lagged, Utility and
Consumer Staple have still rallied over 5% since the follow-through day.
WON Global View
The U.S. market is in a Confirmed Uptrend. The S&P 500 and Nasdaq rallied up to their respective 100-DMA (S&P 500: 2,712 (+0.3%); Nasdaq: 7,288 (+0.1%)), which is now serving as near-term resistance. Should the indices clear above this level, the 200-DMA will be the next level of major resistance.
WON Global View
The U.S. market is in a Confirmed Uptrend. The S&P 500 and Nasdaq cleared above resistance at January 18 highs. The next major level of resistance is the 200-DMA (S&P 500: 2,741 (+2.2%); Nasdaq: 7,452 (+3.6%)). Distribution remains at just one day on the S&P 500 and zero on the Nasdaq.
Strategy View
Key points from the report:
S&P 500 earnings are decelerating, but the S&P’s P/E ratio has also fallen significantly given rising 10-year yields.
Given the Fed’s pause, if yields continue to come off highs, P/E ratios could see moderate expansion once again.
A 6%+ gain since the January 4 follow-through day on the S&P 500 is in line with the average of second follow-through days, which have worked to continue past bull markets.
The S&P 500’s 7%+ gain in January was only the fifth time since 1970 when a 7% monthly loss was followed by a 7% monthly gain.
The four (1974, 1987, 2002, 2009) other instances ended prior bear markets, and one (2011) ended a large market correction.
Forward gains once this precedent is established are well above average for the next six months. An S&P 500 gain of >5% in January (nine prior instances since 1970), similarly leads to a well above average next six-month period.
Technical setups are much improved, with all indices and sectors above 50-DMA. Tests of the 200-DMA are looming for sectors and a majority remain more than 10% off highs. Breadth is also better, and recent actionable Focus List additions include NOW, CREE, BA, NEWR, FISV, DXCM.
WON Global View
The U.S. market is in a Confirmed Uptrend. The S&P 500 and Nasdaq continue to constructively consolidate gains over the last month, holding above 50-DMA support with little to no distribution.
WON Global View
The U.S. market is in a Confirmed Uptrend. The S&P 500 and Nasdaq gapped down at the open yesterday, but both closed at session highs and avoided distribution. The major averages are constructively consolidating sharp gains over the past month, holding their 50-DMA support in the process with little-to-no distribution.
WON Global View
The U.S. market is in a Confirmed Uptrend. The S&P 500 and Nasdaq held support along their respective 50-DMA last week before pushing higher Friday. Both indices are now testing resistance at January 18 intraday highs (S&P 500: 2,675; Nasdaq: 7,185) before a potential move to the 200-DMA. Overall action remains constructive, with just one distribution day on the S&P 500 and zero on the Nasdaq.
