• Comments for May 17, 2023

    After spending about 10 days trekking in the French Alps, I returned yesterday and restarted watching the markets.

    The big picture tells us that the $SPX is in a bullish C&H pattern,



    While the 10Y rate stays in a close range between 3.4% and 3.6%.



    As a consequence, the yield valuation tool indicates that markets are slightly overvalued here,



    while the mcclellan indicator points to a downtrend.



    What really matters here for equities is that even though the Money Flow seems to be weakening on the large stocks, it is still well above zero and hence this is market positive.







    The only negativity is to be found in the commodities/energy sectors as well as the financial and the defensive sectors. These are all sectors that are fragile to higher interest rates.











    Hence, what we see is probably money rotating into the largest stocks and the tech sectors.

    It is interesting to see that investors' mood is rather negative as most largest tech and $spx tracking ETFs display impressive selling activities.











    The Cumulative Ticks also displays negativity.



    Conclusions:

    With the current 10Y rates, there is basically no upside in equities from here.
    I would however be a buyer of energy stocks and especially VLO if rates were to fall down.
    I would short the market is the MF turned negative on the largest tech stocks or on the 20DMF.



    Below are the trade ideas for the coming days: