Market Condition Analysis
The S&P 500 (SPY) is in the midst of a key bullish reversal pattern which was initiated yesterday. The market is still “toppy” with resistance @ 212-213 levels. Technically speaking, which is the basic premise of this report, price action is still showing the bears remain in control as the SPY continues to trade below its recent advancing channel. Many of the components are beginning to reestablish support at their 50-day moving averages and if the bulls can push the percentage of components above 50, then we could easily see the market make a another run to challenge its most recent highs.
Rightly so, everyone who is anyone in the market has been fixated on Brexit and awaiting its impact upon the global markets. Investors are clearly favoring safety and tangible assets over risk, which is still being confirmed by the superior relative strength of bonds, commodities and real estate.
Equities became extremely oversold since Friday, so their positive price action during these last two trading sessions is not all that surprising. Besides that, some end of quarter window dressing never hurts either. Meanwhile, Latin America continues to move to the beat of a different drum as it far outpaced all of the major equity markets.
And, as always, the first shall be last and the last shall be first, so the Russell 2000 (IWM) led the U.S. markets, outpacing the DJ-30 (DIA), S&P 500 (SPY) and Nasdaq-100 (QQQ). Standouts among sectors were Energy (XLE), Financials (XLF), Healthcare (XLV), Telecom (IYZ) and Technology (VGT).
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(See asset class performance table below)
ETF Capital Markets Performance Summary