Due to travel plans, there will be no Daily Technical Strategy video today. Thank you for your understanding.
$QQQ breakout along with Technology this week has cemented Technology as an area for further outperformance into early to mid-April. Growth should trump Value, and Large-Cap is preferred over Small-cap.
DeMark counter-trend signals are premature on QQQ as well as the relative ratio of $QQQ/$SPY, indicating that despite Technology having gotten overbought, additional gains are possible.
$QQQ is now firmly over its 315 level, and likely drives prices up to $326. Thus, it’s a must to stick with Technology.
SPX has neared the area at 4075-9 as shown below. Above that lies 4105-7. However, given that $QQQ still looks quite bullish, there might not be material resistance until mid-April.
Exceeding 4107 would provide a much better landscape for SPX; However, barring any material change in trend, it’s difficult to consider fading this SPX move heading into a very seasonally positive month at a time when sentiment remains bearish.
Healthcare has been slowly but surely coming to life in the short-run. However, Biotechnology will need to join Medical Devices and Pharmaceutical stocks in bouncing to help this sector break out vs. SPX in relative terms. Thus far, this has not occurred.
Energy stocks remain quite attractive, and WTI Crude finished right near my $74.50 target. This looks to be an area of outperformance, and I expect acceleration in Energy as Crude breaks 74.50 and could be driven by Exploration and Production stocks, vs the Oi Services names.
There is a minor short-term cycles that is due as markets finish out Q1. However, this might prove minor only, with larger resistance occurring in mid-April.
QQQ vs SPY ratio looks likely to trend higher into early April
One interesting development with regards to $QQQ in its relationship to $SPY concerns the lack of upside exhaustion signals following the breakout in QQQ this week.
Daily Symbolik charts below highlight this pair in ratio form. DeMark-based exhaustion looks to be at least 4-6 trading days away from possibly signaling exhaustion. (QQQ needs to outperform SPY into April for any counter-trend sell signals to develop)
Thus, technically speaking, it looks premature to bet against QQQ, and additional outperformance looks likely into early April.
Furthermore, daily cycle composites of $AAPL (not shown) show the potential for a cyclical peak in mid-April. At present, there are no signs of counter-trend exhaustion in AAPL and prices just broke out to new weekly highs as of today, Thursday 3/30/23. Thus, if SPX and QQQ’s largest holding has broken out and illustrates no reasoning technically for why this breakout is false, it looks right to expect further strength out of AAPL and also QQQ in the days to come.
Once exhaustion signals are present in $AAPL as well as relative charts of $QQQ vs. $SPY, there stands a possible chance of consolidation in Technology following this recent surge. At present, this remains premature.
Aluminum has moved to multi-week highs and looks to be bottoming
Aluminum looks to be joining other base metals like Nickel in breaking back out to new multi-week highs this week.
This is a positive development for Aluminum, and given the strength in Aluminum, Nickel, and Copper (the latter is on the verge of breaking out) further strength looks likely in the weeks to come.
Furthermore, both precious and base metals look attractive, and this should bode well for outperformance in the Materials sector in the short run.
Once COMEX Copper exceeds $4.15, this should also constitute a technical breakout, and my analysis shows this rallying back up to $5. (I’ll discuss this more, when it’s confirmed, but could happen within the next week, time-wise based on its current structure).
Proprietary Short-term Cycle could lead to a turn in early April
Outside of my cycle composite I often employ from Foundation of the Study of Cycles, another proprietary cycle tool I often utilize looks to have an upcoming turn at the end of March/early April.
Former turns occurred on schedule over the last year and this has projections for 3/30, and then 4/26, and 5/24, each of which could take on importance.
Given the end of the 1st quarter approaching, any turn might be postponed for a few days to allow for gains to kick off the new quarter, and I’ll monitor for any evidence of this being proven correct, or failing.
Given the breakouts being seen in $QQQ this week, I’m leaning towards this signal likely failing at this time, but being more effective in late April near 4/26. However, given its track record of success over the past 12 months, I felt that this was important enough to share.
These cycles are based on principles of natural law, and involve studying prior highs and lows of the Equity market to determine future days of possible trend change.