Another new all time highs and now what?

“Market always fools the majority”

Another week is behind us and what a week it was. As my models foretold and I published in my blogs Stock market pullback or something bigger? and Stock markets: is the worst behind us? I was bullish throughout recent pullback. So, where do we go from here? Let’s take a look at what my models have to say.

The answer to the question of which are Outperforming sectors and which sectors should be avoided is provided in section Underperforming sectors.

In section Risk ON/Risk OFF environment, I provide an answer if traders are willing to risk more or less.

Longterm main models

Nothing new here both; Socha Investing main longterm models remain bullish.

Weekly Longterm model remains bullish. See first chart for more explanation.
Daily Longterm model also stays bullish. See second chart for more explanation.

To learn more about my models, check this link. (Just in Slovene for now)

1. Weekly chart – Socha Investing Main model – Long term new highs – new lows are expanding and this is another bullish signal
2. Daily chart – Socha Investing Main model – New highs and new continue to expand and I we are above “Wall of worry” blue line

Midterm main models

3. Weekly midterm model remain bullish, no sell signal. On the contrary, an expansion in 1 month New highs – new lows continues. See chart 3 for more explanations.

4. Daily midterm model remains bullish as well, no sell signal. Volume and adv/decl oscillators are both in bullish zone and moving higher. See chart 4 for more explanations.

Nothing more to comment here – bullish!

To learn more about Midterm model, follow this link. (Just in Slovene for now)

3. Weekly – Midterm model – 1 month New highs-new lows line crossed into historically very bullish territory. Bullish.
4. Daily – Midterm main model – both oscillators remain in bullish territory and are moving higher. Do I have to say this is bullish?

Outperforming/underperforming sectors

New trend strength indicator:

I added a new indicator with which I track performance of sectors. Second panel from bottom up. Purple line represents trend strength of underlying symbol; while orange line represents relative strength vs. S&P 500.

If both lines are moving higher and they stay in green area this is bullish; the opposite is true if both lines are moving lower and end in red area.

Green triangle: Strong absolute trend – Bullsih

Black triangle: Strong absolute and relative trend – Very bullish

Red triangle: Weak trend strength – Bearish

No sign: Neutral

Outperforming sectors

Technology sector continues to lead. QQQ Nasdaq 100, XSD & SMH semiconductors, IGV software and Cybersecurity CIBR.

Large caps AMZN, MSFT, GOOGL, AAPL broke out to new highs this week. I like that they started to participate, bull market not over yet.

Financials XLF, KBE regional banks and Energy XLE manage to hold the breakout, but lag SPX. Also RSX is taking a breather.

See charts for more explanations.

XLK – new highs, taking back the lead
QQQ – very strong performance
MAGA – MSFT AAPL GOOGL AMZN – I like the development here. New closing highs, also relative outperformance. Bull market is not dead!
XSD – semiconductors – a bit extended
SMH – semiconductors also joined the club
CIBR – cybersecurity stocks – not as strong as other tech sectors but still doing fine
IGV – software stocks closed still strong
KBE – still strong, but lagging SPX last few weeks
XLE -still above BO level
RSX – relative underperformance, let’s see where it goes from here
XLF – financials, relative underperformance,but still holding BO

What about small and mid caps

Breakout to new highs sure seems bullish.

IWM – small caps – break out to new highs is very bullish and speaks about broad participation
MDY – Mid caps – break out to new highs

Underperforming sectors

Latin America ILF and Brasil EWZ and China FXI big laggards this week. China FXI has been a big under performer since February this year. Bottoming process in progress, we could revisit lows again.

ARKK looks like it had a false breakdown abut has a lot of work to do, lagging S&P 500.

I would continue to avoid GLD, TLT, ILF, EEM and EWZ.

See charts for more explanations.

TLT – another good week for bonds, above 200 SMA, but still underperformer
ARKK – worth keeping an eye on, but not worth investing in just yet
FXI – China – another disappointing week.
EEM – emerging markets, not good
EWZ – another terrible week for Brasil, no time to rush in and catch falling knife. Bottoming is a process.
ILF – similar to Brasil, no time to rush in and catch falling knife. Bottoming is a process.
GLD – had a good week, but still underperform SPX.

Risk ON or OFF environment?

This week markets still in RISK ON mode, no big changes from last week.

See charts for more explanations.

SPY/XLP Staples – Risk ON
SPY/XLU Utilities – Risk ON
SPY/TLT – Risk ON
SPY/GLD – Risk ON
HYG/IEI – Riskier High Yield bonds vs. Treasuries- Risk ON
JNK/IEF – Junk Bonds vs Treasuries – Risk Neutral
GBTC – Crypto strong week – Risk ON
QQQJ – Nasdaq Next gen – breakout to new highs, Risk ON
IPO ETF – looks like it wants to go higher, if that happens iit would be another Risk ON signal.