We can see that this move is due to a buying strength on the largest stocks, but also on tech/semiconductors.
There are however two hidden signals in this market:
1. Exuberance
We can see below that the market weighted average TEV is spiking. This indicates that funds are too eagerly moving money into risk assets, especially into mammoth stocks.
However, a measure of the 'extension' of this indicator - it is the measure of the distance between the Blue and the Pink lines in the above chart - tells us that we are at the highest extension in a long time. These levels have usually been followed by pullbacks.
2. Oil and Energy
When I reviewed the EV patterns this morning, I noticed a very strange negative divergence on XLE.
This selling occurred mainly on CVX, but I also detected some negative divergence on XOM, MUR, COP, HES, PDCE, OXY, DVN, FANG, NOG, NOV, BKR and even on energy related stocks such as batteries makers LAC, LTHM VTRA and FLNC
We can also see strange negative divergences on Oil and NatGas
I believe that investors expect oil prices to drastically fall in the coming weeks. I would guess that this should be a consequence of the starting in February $60 price cap set on Russian oil for shippers to secure shipping insurance. Hence, Indian/Chinese customers will rush to buy cheap Russia oil, which will drag down demand for more expensive oil from Saudi Arabia. Hence the negative expectation for the whole energy sector.
Conclusions:
Although the $SPX could still push to $4150, it is greatly overbought here.
A pullback is probably coming in the next days, especially for the energy sector.
