To Date Most of the S&P 500 Have Reported Earnings

To Date Most of the S&P 500 Have Reported Earnings

$SPY, $RUTX, $DJIA, $QQQ, $VXX

Last Wednesday, the US stock market reversed to the Southside in reaction to comments made during Fed Chairman Powell’s afternoon PC.

After the sharp April gainers, many traders were looking for a reason to trade the Southside of the market.

But, the selling did not last long, as the S&P 500 reached the 2900 mark early Thursday, and then spent the rest of the week moving North.

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The small-cap Russell 2000 closed well above its February high last week, gaining 1.4% as it led the other market averages higher.

The Dow Jones Transportation Average had a good week too, +0.71%, and is up 19.5% YTD.

Only the lagging DJIA closed lower in the week.

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From last Monday’s high the iShares Russell 2000 (IWM) pulled back to below its 20-Day EMA Thursday before gaining 1.9% Friday. The daily chart has minor upside targets in the $163-$165 area. The trading range (lines a and b) has further targets in the $168-$170 area. IWM closed 3.8% below its weekly starc+ band at $166.30.

The daily Russell 2000 advance/decline line dropped below its WMA Wednesday, but closed strong, with a convincing breakout above the resistance (line c), which confirms the price action. The weekly A/D line (not shown) has reached its highest level since late September 2018. It is still well below its all-time high.

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As the table indicates, the NAS 100 and Invesco QQQ Trust (QQQ) are up 24% YTD. Over the past 2 weeks, the QQQ has tested last September’s high at $186.66 (line a). It closed last week just 2.6% below the weekly starc+ band at $196.09. There is long term support at $177.51, which corresponds to the rising 20-Wk EMA.

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Looking at the economic data, the NFPs report came in way stronger than expected last week, and Consumer Confidence exceeded expectations too.

There were, however, a number of reports that missed the mark.

The Dallas Fed Manufacturing Survey came in at 2.0, as the market was expecting 9.5.

The ISM Manufacturing Index, at 52.8, was the weakest reading in almost 2 years. The chart shows a clear downtrend from the highs last summer.

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The yield on the 10-yr T-Note yield closed higher last week as it rallied from the mid- week low of 2.455%. The weekly chart shows that the rally from the late March low just reached the chart resistance (line b) in the 2.617% area.

The downtrend (line a) is at 2.646%, and a strong weekly close above this level would be a sign that yields have bottomed.

The weekly MACD has been negative since last November, but is now closer to bottoming.

Plus, there were a number of sector ETF’s that closed the week above their Quartery Pivots (Q-pivots), which may be a sign of a positive trend change. Now that 75% of stocks have released their earnings, there are a number of stocks that look ready to still move higher, as they have been consolidating for the past month.

Traders are buying them on good set ups. Do your homework and ferret them out. It is your money and so your responsibility.

Have a terrific week.

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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