Client Portal

Is it right to buy Energy for a bounce? Equal-weighted Energy has trended up sharply over the last couple weeks, but these gains remain part of a lengthy downtrend in the relative picture of Energy to SPX since October 2023. While investors heard reports of possible China-led supply shock events like banning US-sanctioned Tankers from Shandong Port, the entry for most sanctioned Oil which might drive up shipping costs (1.74 million barrels per day from Iran, Russia, and Venezuela in the last year) However, Crude failed to lift in trading and closed down negative. Overall, my feeling is that Energy likely does outperform in Q1 before heading lower, but at current levels, it's likely that Crude, and by extension, Energy might require a "breather" before being able to push higher. This downtrend shown below is a daily chart of Equal-weighted Energy (RSPG0.73% ) in ratio form to the Equal-weighted SPX (RSP-1.54% )

Happy New Year All! As the first full trading day of 2025 gets underway, US Equities are attempting a rather lackluster bounce, but SPX will require much more strength this week to have some conviction that the decline is complete as the intermediate-term uptrend was broken for Equal-weighted S&P 500 (RSP-1.54% ) and both daily and weekly MACD are now negative (indicating that near-term momentum has joined trends in turning more negative in recent weeks) Overall, while i expect that this consolidation should be complete by mid-January, it's hard to claim technically just yet that lows are in place. This weekly RSP chart shows the recent breakdown, and reclaiming this uptrend on better than average sector participation looks important. Patience required, and "no need to be the hero" in buying dips just yet technically, as SPX very well could move to 5650-5700 before bottoming.

Today's mild gains are nearly exclusively being driven by Large-Cap Technology gains which along with some of the Cruise-liner and Casino names within Discretionary are resulting in positive NASDAQ 100 gains of +1.25% and SPX gains of +0.28% while the Equal-weighted SPX (RSP-1.54% ) is down -0.30% on 1% or greater losses in Financials, Utilities, Energy, and REITS.. 9 of 11 sectors are down today and market breadth is -3/2 negative. Yet a Semiconductor bounce along with SMCI1.87%  rebound has been healthy for Tech today. SPX daily chart enclosed shows SPX up near the upper edge of its channel resistance, but DeMark-based exhaustion counts look early by roughly 2 days (Both for SPX and also QQQ) Thus, no evidence of any selling pressure as December trading gets kicked off, but I expect markets will show consolidation between 12/5-December expiration before the Santa rally kicks in. Overall, i anticipate maximum gains to 6100 SPX while downside probably does prove muted in December given AAPL's breakout last week and 5950 could hold.

QQQ currently up +0.40%, and has not yet moved to new highs like what's happening with Equal-weighted RSP-1.54% . DJIA is lower today while IWM also down -0.41%, so while SPX is set to make new all-time highs on a daily close today potentially, other parts of the market aren't doing as well today. Thus, important to keep abreast of what's moving and what's not, as Materials, Discretionary and Healthcare are all down more than -0.60% and 10 of 11 sectors are lower. However, no evidence of deterioration thus far out of SPX, nor QQQ, both which are making mild progress this week.

Equal-weighted S&P 500 has now outperformed SPX for the last 2 weeks, but now looks to be at an interesting crossroads of resistance which might prove important heading into next week See the relative chart of RSP-1.54%  to SPY-1.83%  below

Equal-weighted SPX is set to make new all-time highs on a weekly close this week, but lies right near important former peaks which are likely to prove to be resistance into next week. RSP-1.54%  key levels lie at 185.79 and above would lead to fractional gains to 188 which should be very strong resistance.

Stock indices remain fractionally positive when eyeing both ^SPX-1.83%  and QQQ-2.06% , while RSP-1.54% , the Equal-weighted ^SPX-1.83%  is negative today, with eight sectors lower out of 11. Technology's gains have disguised some of the weakness in the broader market, but market breadth measures remain about 3/2 negative today. The initial area of importance into tomorrow will be the swing low near 5804 for SPX, and under invites a challenge of 5765. Transports and Small caps have both underperformed today after yesterday's strength and US Dollar and yields are both higher after today's 25 bp cut by ECB.

Heading into mid-day, we see a very defensive rally in markets, and real broad-based strength as RSP-1.54%  is up +0.75% and 10 of 11 sectors are higher on the day, with Utilities, Energy, Discretionary, Staples and Healthcare all up more than 1%. yet, SPX is flat, and QQQ is lower by -0.45% as XLK is down nearly -0.90% which makes it seem like a "down day" but this is largely only large-cap Technology- Equal-weighted Tech is actually lower by nearly half that amount, or -0.53%. But Today is largely about Defensive strength and Tech weakness while the broader market is rallying in stealth mode

Heading into Europe's close, we see a moderate rally in US Equities that has been largely disguised by weakness in AAPL-2.90%  which is falling by the most it has in a month. While Equal-weighted S&P 500 did rise to a record high today early in trading before giving back some of these gains, 10 of 11 sectors are higher today on an Equal-weighted basis, with only Technology being dragged down. This Tech weakness isn't as apparent when eyeing RSPT-2.14%  which is just lower by -0.26% but XLK-2.54%  is down -0.67% as AAPL along with SKYW-0.49% , QRVO-1.38%  MU-0.72% , TER-2.54% , and AVGO-3.15%  are all down more than 3%. Thus, Semiconductors are down, but the broader market is acting fine, with Financials, Energy, REITS and Utilities all higher by more than +0.50% and even Healthcare is up by +0.47%. Overall, it's important to recognize that the US stock market is made up by more than just AAPL-2.90% , but Technology's negative performance today is dragging down the major US Benchmark indices like SPX and NASDAQ, while DJIA is positive, DJ Transportation Avg is positive and RSP-1.54%  is higher by over +0.30%.

Despite how difficult these last couple months have felt, keep in mind that Equal-weighted ^SPX-1.83%  made all-time highs just eight trading days ago back on 8/30, and yesterday's volatility resulted in RSP-1.54%  pulling back to exactly test the area of its 50% retracement area before rebounding back higher. I expect markets should lift into next week's Fed meeting, and we're seeing sharp outperformance today from Small-caps (IWM-2.81% ), and a Technology bounce during the back half of the day should help SPX to begin showing more moderate gains. (RSP-1.54%  the Invesco Equal-weighted S&P 500 ETF daily chart) is shown below