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Heading into Europe's close, we see a moderate rally in US Equities that has been largely disguised by weakness in AAPL-0.13%  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-3.15%  which is just lower by -0.26% but XLK-2.78%  is down -0.67% as AAPL along with SKYW-4.32% , QRVO-1.34%  MU-4.45% , TER-2.48% , and AVGO-3.56%  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-0.13% , 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-1.52%  is higher by over +0.30%.

20 mins til the bell, US Indices have recovered nicely today and SPX is now set to be positive on the week at current levels, (above 5464.61) with QQQ being 1 point away. In a bit of a reversal of the sector participation we've seen in recent days, SPX's gains are being driven nearly all by Technology today after three straight days of weakness. XLK-2.78%  is higher by +1.79% while Equal-weighted Tech is up +0.41%, but market breadth is negative by nearly 3/2 as six sectors out of 11 are down more than 1%. Thus, the actual performance "under the hood" is not nearly as robust as might be expected when one hears QQQ is up 1%. Very good performance out of NVDA-3.67% , ARM-4.08%  which have both rallied more than 6% today, while ISRG-2.44% , MELI7.09%  and KLAC-3.00%  are higher by 3%. However only Tech and Communication Services are positive by more than +0.30% today while Energy is fractionally positive at +0.05%. As hourly SPX charts show, it's difficult to claim that lows to this recent pullback are officially in, as the minor downtrend from last week is intact and the shape and structure of today's bounce is somewhat unconvincing. However, i'm confident there should be a low in place by this week and kick off a strong start to July which historically has been quite good during Election years

US Equities have rallied off early intra-day losses and now ^SPX-1.67%  is higher by +0.25% while QQQ is up +0.40% and DJIA is just fractionally positive. Breadth is fairly flat, as five sectors are lower in today's trading, but XLK-2.78% 's +070% gains are helping to drive Indices positive despite weakness in some of the more defensive areas of the market like REITS, and Utilities. SPX, as shown below on hourly charts since mid-May, has achieved a minor breakout today which should help to drive prices up to 5521, which is a projection target while QQQ might hit 483. Overall, despite a minor bounce in rates, Large-cap Technology and by extension the US Equity indices, are really not being affected today, and higher prices look likely early this week.

A rather unusual day for risk assets, as all 11 sectors are down on the day. yet big-cap Technology strength is helping XLK-2.78%  rise by +0.85% as AAPL-0.13%  breaks out above its $200 level that's held since last July. Other leading stocks within Technology include ANET-4.84% , CDNS-4.40% , NTAP-0.06%  and FSLR-5.27% . Two charts of AAPL shown below, daily and weekly. While the short-term momentum is getting stretched, the counter-trend exhaustion indicators remain early to show exhaustion by around a week and a breakout back to new all-time highs for AAPL is certainly important structurally and a larger positive for SPX and QQQ given its size

Today's PPI was "hot" and yet stocks are not really selling off

• this is a sign stocks have more upside near-term
• as highlighted multiple times this week, we are watching margin debt
• still too low and until it is higher, we think stocks have upside

The near term top will be a moment when we get "good news but stocks fail to rally." That is not today. In fact, today is the opposite. Bad news and stocks are holding in there. Stick with --> IWM-2.93%  XLF-1.30%  XLI-2.19%  XLK-2.78%  QQQ-2.05%  and Bitcoin BTC and miners

Another day which is more interesting than the SPX net change might indicate with prices just marginally "green" at +0.06% at 4997.37 hovering just below 5000. Both Small and mid-caps are up sharply today, while both US Treasury yields and US Dollar have pushed higher. Large-Cap Tech influence is showing a rare period of underperformancce as FTNT-3.69% , AAPL-0.13% , ORCL-4.65% , AMD-2.92%  are all lower. Yet the strength of MPWR, ON, ANET, NXPI, AVGO gains are helping Semiconductor stocks and the broader equal-weighted Technology sector to show gains of more than 1%. Thus, while markets might seem flat today, Tech is actually showing some stellar outperformancel along with Equal-weighted Discretionary. Both of these RSPT-3.15%  and RSPD-2.47%  are up more than double what XLK-2.78%  and XLY-2.63%  are showing in Thursday's trading. As discussed previously, SPX 5000 has no real significance outside of psychological reasons, and likely should be surpassed next week.

Today is showing an extraordinary amount of divergence that's been quite rare in recent months, if not years- Nasdaq is up 1.1% and SPX higher by 0.63%, but these indices are diverging substantially from actual market performance- meaning 9 out of 11 sectors are lower on the day and breadth is hugely bearish, by nearly 3/1 based on advance/decline as well as volume. Technology as a sector in Equal-weighted terms is actually down on the day (RSPT-3.15%  -0.18%) while XLK-2.78%  and XLY-2.63%  are higher by +0.65% and +0.80% respectively. Thus, we're seeing a huge amount of outperformance by Large-Cap Technology that's been rare for even recent months. Technically for those who don't study internals, it appears like the market's having a great day. However, it's often a warning sign if most stocks are falling, but a select few (META-1.70%  +20% today alone, AMZN +7%) are carrying markets while the broader market suffers. Since most investors follow and are benchmarked to the SPX, it's right to study SPX technicals. Yet, this large-cap divergence is growing more extreme, and it's just worth pointing this out on a rainy Friday- Have a good weekend All!

The choppy equity performance of first two weeks Jan tells us we are in a “difficult” period and probably like this most of first half

• but as we noted in our latest note and video
• we see new highs in Jan because this is what happens when we get within 1% of all time highs
• but new highs doesn’t mean “easy sailing”

So be wary. For the full year, our top ideas:

• small capsIWM-2.93%
• financialsXLF-1.30% KRE-2.51%
• industrialsXLI-2.19%
• technologyXLK-2.78% QQQ-2.05% HACK-2.71% PANW-3.91%
• even miners/bitcoinBITB-3.62% MARA-7.21% RIOT-8.71%

Monday's early gains are starting to dry up and only 3 sectors are positive today on an Equal-weighted basis, yet, Magnificent 7 have helpedXLK-2.78%  be positive by +0.40% which is giving the illusion of an "up" market- This rally from last week will need to be consolidated, and while i expect gains this week, we'll likely require a pullback to 38% or 50% of last week's strong breadth rally before a further push higher can occur. 2 yr and 10yr yields both higher by 6 bps- Fractional weakness out of the US Dollar, and Ethereum has broken out above 1900 which bodes well for "catchup" Overall S&P pullback under 4300 should provide an attractive entry point from risk/reward perspective this week