Mid-week market update: The S&P 500 followed the typical pattern of consolidating sideways for about a week after an upper Bollinger Band ride before breakout out to a fresh all-time high. As recent history shows, it’s impossible to know which way stock prices will break after the consolidation.
In many ways, the upside breakout was not a big surprise.
Positive seasonality
One reason is positive seasonality. Ryan Detrick documented how stock market has enjoyed a seasonality tailwind during the first half of July.
Other bullish factors
I am also seeing other bullish factors at play. We are entering Q2 earnings season, and John Butters at FactSet pointed out that Street analysts have made smaller than average cuts in EPS estimates ahead of reporting season, indicating strong fundamental momentum.
From a technical perspective, the lagging relative performance of defensive sectors is a constructive sign for the bulls.
Longer term, the market’s narrow leadership continues to be worrisome. In the short run, however, large cap tech is enjoying strong relative momentum (bottom two panels).
Don’t fight the bull trend, at least for the first two weeks of July.
Did anyone notice gold, silver and copper had very large moves today, Gold miners (GDX) gaped higher with a large percentage move on good volume, It could be the start of a major move for the metals.
My gold miners analyst is very bullish on strong second quarter earnings since bullion prices have been so strong. I’ve shift from bullion to miners because of this