The Market Forecast indicator shows a bearish intermediate position but is not confirmed by a falling six-week moving average.
Also, the weekly chart shows a bullish intermediate confirmation signal.
Both of these patterns suggest that there could be a short-term rebound in risk appetite leading up to and, potentially, up to options expiration over the next two weeks.
Several indicators are showing signals that look bearish but are more of a “buy dip” signal, including RSI, CCI, DMI, and Ichimoku Cloud.
The S&P 500 is enjoying support in this area at the top of the value zone on its one-year volume profile.
Volatility is also showing a “bottom buy signal” with the VIX falling to a bullish level against the VIX3M. This suggests that we are in fact more bullish than it appears, with volume and trading ranges also possibly peaking.
Rising inflation expectations have an upward impact on Treasury yields – to a small extent – and a downward impact on the US dollar. A weakening greenback is bullish for long-term risk appetite, although we see a “true” intermediate pullback developing soon.
Weekend stock market outlook video
Communication technology and services, which had the most mature trends before, suffered the biggest losses this week (excluding energy). Other cyclical sectors like materials and industrials held up better in a precursor to what the rotation might look like in a “real” pullback.
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