US equity markets market improved their footing with most key benchmarks gaining more than 3% for the week. The NASDAQ 100 is up over 9.76% YTD, and the S&P 500 regained it’s 200 daily moving average. This recovery of the S&P 500 (after dropping more than 20% below its 200 DMA) is the fastest on record. However, do not get too excited and think we are out of the woods as the Russell 2000 ETF (NYSE:IWM) is still down -16% YTD while the Dow Jones Industrials is -10% while the unemployment rate is currently at levels not seen since the Great Depression.
Clearly, we have two investing worlds or alternate realities. By the way, it is not uncommon for stocks to rally on bad news as that is when the Fed is most accommodating. This time the Fed has taking supporting the markets to unprecedented levels buying ETF’s whose holdings include Junk Debt. So, you can choose the reality you prefer but be prepared to change course on a moment’s notice and certainly do not ignore risk controls.
This past week’s highlights:
- Risk Gauges are still bullish although they backed off a bit
- The NASDAQ 100 is just +/- 1 ATR away from all-time highs
- Biotech and Semi’s continues to lead and looking to break out from two weeks of compression
- Oil is showing good momentum on our Real Motion indicator and could bounce
- Value and Small Caps themes could be coming back from the dead
- Volume has picked up, showing bullish accumulation
- Volatility ($vix.x) still hanging onto elevated levels
- Short Term Sentiment is running rich as the number of stocks above short term moving averages is forthy