Market Views 841

Down, but not Out

Breadth remains a rather fickle indicator. NYSE breadth has been much stronger than NASDAQ breadth. Hence the two breadth oscillators are split at the current time: NYSE breadth is on a buy signal, while “stocks only” is not.

New 52-week Highs vs. New 52-week Lows has also given a sell signal.

While this bit of stock market mini-carnage was taking place, $VIX rose sharply, entering “spiking mode” on May 11th. While $VIX is in “spiking mode,” it is negative for the market, but it also leads to a “spike peak” buy signal eventually. That buy signal came at the close of trading on Thursday, May 13th.

In summary, the market has been wounded by this sharp decline. Even so, I would not say that the $SPX chart is bearish. It would have to break support at 4000 and 3870 in order to “earn” that negative appellation. But we do feel the bears have the upper hand short-term.
Lawrence G. McMillan, The Option Strategist, optionstrategist.com, 973-328-1303, May 14, 2021

Rotation Ahead
It appears that an at least somewhat meaningful shift may be taking place in terms of market leadership, with investors losing their appetite for stocks related to the “stay at home/work from anywhere” thesis that proved to be a very lucrative one to follow during the pandemic while simultaneously growing hungry for most anything that a) might benefit from “the reopening,” b) pays a dividend and doesn’t seem to be overvalued (something that is always in the eye of the beholder, of course!), or c) will likely benefit from the trends that are underway (and perhaps gaining strength) when it comes to inflation and commodity prices, in general.
Nate Pile, Nate’s Notes, NotWallStreet.com, 707-433-7903, May 14, 2021 

Bullish, but Cautious
Last week, the selling that had been concentrated in growth names spread to the rest of the market through Wednesday, though a late-week bounce helped a bit. Still, not much has changed with the overall environment—growth stocks remain in the dumps, and while the broad market is obviously in better shape, even there the action is turning choppy and challenging. We continue to think it’s best to stay relatively cautious until we see broad buying power emerge.
Michael Cintolo, Cabot Top Ten Trader, cabotwealth.com, 978-745-5532, May 17, 2021

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