I am unexpectedly traveling this morning, so this will be a post from my cell phone. Incidentally, I have passed through both New York and Paris so far this morning and the airports are packed, a stark contrast to a month ago when you could have the airports and planes to yourself. Europe is notable because they have been closed and just re-opened some countries on May 14th.
We had a V reversal at the end of last week with two bull bars stacked on top of each other in the S&P 500. The market turned right where it should and the trend is intact in all four major indices. Notably, tech is still weak and maybe other than Google (GOOGL), there is not much that would interest me in FAANGMAN+T.
In rank order, 10-year rates and the financial sector are the keys to the short-term kingdom. I will put out a macro picture later in the week when I get my feet back on the ground.
Commodities, whether they be metals, materials, agricultural, or energy are all on the move and threaten to displace the stock index quartet in relative strength. Gold is on its downtrend line and could break through (though gold has a tendency to be a heartbreak trade). The DBC and DBA commodity ETFs have now broken long-term downtrend lines – a major trend reversal.
Today, we want to see the S&P 500 stay in the top 1/3 of Friday’s bar at worst and continue higher at best. We are testing around the half-roundie pre-market. The 5-day EMA would be the line in the sand by the close. Otherwise, opening inside of Friday’s range at this writing gives us no early clues to the open.
A small pullback is in the cards after two bullish back to back days, but don’t count on it.
A.F. Thornton