Weekly Chart Review

Can't stop. Won't stop.

I have no way to justify this statement but it certainly feels as though we are in blow-off top mode for US equities.

The good news is that this could continue for a while…the bad news is that no one is going to tell us when it’s going to stop.

If we check in with our S&P 500 “cup and handle” pattern, this would suggest a target of 5,725 or roughly another 11% higher from Friday’s close.

Taking a look at the NASDAQ’s “cup and handle” pattern, this would suggest a target of 21,423 or roughly another 17% higher from Friday’s close.

Going back to my point above about not knowing when the party will stop, it may be worth keeping the following levels in mind.

Working from left to right, in the chart below, I am showing the daily, weekly, and monthly charts for the S&P 500 with the applicable trailing stop loss levels highlighted in blue.

These are the levels where you could consider scaling out of the market if we see the market start to turn lower.

Recall, that these are trailing stop loss levels which means they will move higher as the market moves higher so these levels do not remain static.

Here is the same chart but for the NASDAQ.

Rates

Hopefully, you saw my post from last week where I provided a “bull” and “bear” case for US Treasury levels and the applicable ETFs that we track each week (i.e., ZROZ, TLT, TLH, and IEF). If not, feel free to go here to read the post.

We had a strong rally in the UST 10-year to close out last week. The monthly pivot for the UST 10-year is 4.141% so it’s not inconceivable to see the 10-year move down to that level. If so, that will likely be positive for equities as well.

Also, it’s worth pointing out again that the market continues to respect the 4.335% level that I pointed out last week.

The first level of resistance above 4.335% is 4.465%.

The first level of support below 4.141% is 3.928%

Asset Class Review

Let’s turn now to our asset class review.

Overview - Weekly Changes

The biggest change we saw last week was in the “Bullish” move in US Treasuries and fixed income in general. See below for more details.