This is at least what the Mcclellan indicator shown below tends to tell us.
Indeed, the most right arrow is Green, indicating that an uptrend has started.
However, the last downtrend arrow - drawn in Blue - was a failure: the markets went sideways instead of turning down. Does it mean that the current Green arrow will also be a failure?
This mostly hangs on AI stocks related excitement combined to fear regarding to the Fed rates hikes.
For now, on current interest rates, the S&P500 should be valued at around $4000. This is about 5% lower.
And this is mostly the reason why most indexed ETFs display very negative LEV patterns: funds are rotating out of equities because there are better opportunities in fixed income.
http://www.effectivevolume.com/conte...156-etf-review
Another interesting aspect of the current market is its concentration of the NQ8 stocks and AI related stocks (NVDA).
Due to this one sided type of focus, the smaller section of the S&P500 seems to be close to issuing a short signal.
Interesting to also see that the Nasdaq 100 Futures display accumulation while the S&P500 Futures display strong distribution. It is a clear fight between momentum and value.
Conclusions:
When there is such a disconnect between momentum and value, I would be prudent in opening new positions as momentum tends to turn rather sharply. The best is to ride momentum when valuation is right.
