Welcome back to your weekly market checkup!
I hope you had a great week!
ICYMI, you can see the latest Top Pick of the Week here →
Let’s dig into last week’s market recap and the playbook for the week ahead →
The major indexes held together this week, but the strongest move happened somewhere else.
Oil USO 0.00%↑ jumped 9.45% over the past five days, making it the strongest asset in the Market Pulse by a wide margin. USO is now up 22.61% over the past month and has broken out above its 20-day SMA.
That’s a sharp reversal from last week, when Oil’s breakout momentum was cooling.
Bitcoin ($BTCUSD) remained another clear leader, gaining 2.59% for the week and bringing its one-month gain to 24.00%.
BTC tagged an extreme-high RSI reading during the week, so while momentum remains strong, I’m watching whether BTC can continue higher or needs time to cool off.
The major indexes were much quieter.
The Nasdaq QQQ 0.00%↑ gained 0.35%, the S & P 500 SPY 0.00%↑ gained 0.11%, and the Dow Jones DIA 0.00%↑ declined 0.18%.
More important than those relatively flat returns though is where they finished technically:
SPY, QQQ, and DIA all closed above their 20-day SMAs.
Last week, SPY was holding its 20-day SMA while QQQ and DIA had closed below theirs.
This week, all three are back above.
So the question has changed:
Can the major indexes break out from here?
Long-duration Treasuries TLT 0.00%↑ declined 0.43% over the five-day period, but broke out above their 20-day SMA.
→ That’s another short-term technical development I’m watching.
Gold GLD 0.00%↑ fell another 0.52% and closed below its 20-day SMA while also trading below its 200-day SMA. GLD remains up 8.72% over the past month, but technically, it’s moving in the opposite direction of Oil right now.
The Bigger Picture
Last week, we were waiting for confirmation.
This week, we got some.
The major indexes reclaimed their short-term trends. Oil broke out. TLT moved above its 20-day SMA. BTC remained strong. GLD weakened technically.
For the major indexes, holding the 20-day SMA was step one.
Now I want to see what they do with it.
I. The Market Vitals (Best to Worst)
Here’s how the 7 major asset classes ranked this week:
Bitcoin ($BTCUSD)
Oil USO 0.00%↑
The S&P 500 SPY 0.00%↑
The Nasdaq-100 QQQ 0.00%↑
The Dow Jones 30 DIA 0.00%↑
20 Year Bonds Treasury ETF TLT 0.00%↑
Gold GLD 0.00%↑
♥️Market Pulse: 4/7
4/7 assets are up.
BTC, USO, SPY, and QQQ are up.
DIA, GLD, TLT are down.
II. Section Rotation (11 SPDR S&P 500 Sectors)
Energy XLE 0.00%↑ moved to the top of the SPY sector rankings, gaining 2.20% over the past five days.
That confirms the strength we saw in Oil, but there’s another side to the setup: XLE also reached an extreme-high RSI reading.
The momentum is strong, but this is also where I’m thinking about locking in some profits rather than chasing the move.
Technology XLK 0.00%↑ remained near the top, gaining 0.86%. More importantly, XLK broke above and closed above its 20-day SMA. Friday ended with a doji bar, so I’ll be watching whether XLK builds on that move or pauses here.
Utilities XLU 0.00%↑ gained 0.82% and are beginning to set up in an accumulation zone, although the sector remains below its 200-day SMA. Healthcare XLV 0.00%↑ finished slightly positive at +0.17%, while Financials XLF 0.00%↑ were flat.
Further down the rankings, some different setups are developing.
Industrials XLI 0.00%↑ fell 1.06%, but the pullback has moved the sector into an accumulation zone.
Consumer Staples XLP 0.00%↑ declined 1.02% and have entered a decline, while Communication Services XLC 0.00%↑ and Consumer Discretionary XLY 0.00%↑ are both trading below their 200-day SMAs.
XLY was also the weakest sector this week, falling 1.96%.
What This Tells Me
Only four of the 11 S&P 500 sectors finished positive, with XLF flat.
That creates an important test for the breakout question from Part I:
If the major indexes move higher from here, does more of the market start participating?
Right now, the indexes are improving faster than the breadth underneath them.
III. Important Secondary Assets & Sectors
The secondary ETFs give us more detail about where momentum is actually developing.
Energy had the clearest confirmation.
Brent crude ($BRENT) gained 6.40% and Oil & Gas Exploration & Production XOP 0.00%↑ gained 2.57%. Combined with USO’s breakout and XLE leading the S&P 500 sectors, the move is showing up across multiple parts of the Energy trade.
Technology is more complicated.
Semiconductors SOXX 0.00%↑ gained 2.21% and are beginning to set up in an accumulation zone.
Meanwhile, last week’s standout went the other direction.
Software IGV 0.00%↑ fell 4.5%, making it the weakest secondary ETF I track this week after gaining 5.9% the week before. IGV may be starting to roll over here.
Technology stayed near the top, but what led underneath it changed.
Elsewhere, Regional Banks KRE 0.00%↑ gained 1.31% and are setting up in an accumulation zone. Small Caps IWM 0.00%↑ remained essentially flat at +0.09%, but they’re also beginning to set up in an accumulation zone.
Biotech IBB 0.00%↑ gained 1.42% and continues to show strong intermediate performance.
Gold miners are worth keeping on the radar as well.
GDX 0.00%↑ fell 0.39% while GDXJ 0.00%↑ gained 0.18%, despite GLD itself weakening technically. Both mining ETFs remain up more than 26% over the past month.
What This Tells Me
There’s a difference between a move happening in one ticker and a move spreading across a group.
Energy is spreading and technology is rotating.
And with SOXX, KRE, and IWM moving into accumulation zones, there are now potential setups developing outside the market’s current leaders.
That’s where my attention starts moving next.
IV. What Assets & Sectors I’m Watching
Here’s what I’m focused on heading into the new week: