Money Flow for May Week One

By -

Further to my last Weekly Market Update and its subsequent Addendum, this week’s update will look at:

  • 6 Major Indices
  • 9 Major Sectors
  • SPX:VIX Ratio
  • Hypothetical Portfolio
  • Copper
  • Lumber
  • Homebuilders ETF
  • Emerging Markets ETF
  • 30-Year Bonds
  • Various World Markets (*N.B. These will be covered in a separate Addendum post because of space concerns in this post…please check my Blog at this link to see that one)

6 Major Indices

As shown on the Weekly charts and the percentage gained/lost graphs below of the Major Indices, the largest gains were made in the Nasdaq 100, followed by the Russell 2000, S&P 500, Dow 30, and Dow Transports. There was some profit-taking in the Dow Utilities.

9 Major Sectors

As shown on the Weekly charts and the percentage gained/lost graph below of the Major Sectors, the largest gains were made in Technology, followed by Energy, Materials, Cyclicals, Industrials, Financials, Consumer Staples, and Health Care. Some profits were taken in Utilities.

SPX:VIX Ratio

As shown on the 10-Year Monthly chart below of the SPX:VIX ratio, the SPX gained relative to volatility this week and closed above major support at 120.00. Although the SPX made an all-time high today (Friday), it has yet to do so with respect to this ratio. Near-term resistance is sitting 136.00ish, while major resistance is higher at 148.00ish.

Perhaps we don’t see capitulation in the SPX until this ratio hits the 148.00 level…one to watch over the coming week(s).

Hypothetical Portfolio

Further to my last post wherein I updated the performance of a hypothetical portfolio of indices, ETFs, and the 30-Year Bond (in order to broadly track “value” vs. “growth” sentiment), the following graph depicts the percentage gained/lost for the week.

The largest gains were made in Technology, followed by Emerging Markets and Commodities (which tied for second place), Cyclicals, Small-caps, Large-caps, Homebuilders, and Health Care. Some money flowed out of 30-Year Bonds.

Market participants were willing to add “risk” and “Growth” plays to their “Value” acquisitions this week.

Copper

As shown on the Weekly chart below of Copper, price has rallied this week and seems to have stabilized around the 3.00 level (major support). A continuation in the “risk-on” trade in equities may provide the fuel to propel this commodity up to test the bearish 50/200 sma “Death Cross” level at 3.55ish.

Lumber

As shown on the Weekly chart below of Lumber, it finished the week at a major support level of 340.00. I’d be looking for a bounce in this commodity on any continued strength in Copper and Homebuilders (which I’m discussing below). Conversely, any further weakness in Lumber may negatively impact Homebuilders and Copper.

Homebuilders ETF

As shown on the Weekly chart below of the Homebuilders ETF, price has extended last week’s rally to close just below the 61.8% Golden Fibonacci retracement level. If price can continue to advance above that level (31.81), we may see it positively influence Copper and Lumber.

Emerging Markets ETF

As shown on the following Weekly chart of the Emerging Markets ETF, price has also closed just below a 61.8% Golden Fibonacci retracement level (43.93). A close and hold above that level may provide further incentive for market participants to continue adding “risk” and the “Growth” segments to any further “Value” plays.

30-Year Bonds

Money flowed out of 30-Year Bonds, as shown on the Weekly chart below. Price closed just below the weekly 50 sma. This will likely represent an important level in the short term, as a continued decline below that level may signal that money coming out is being deployed into equities and/or commodities, and, possibly, at a faster pace than we’ve seen recently.

No doubt, any further and faster push higher in equities, in particular, may be fueled by the worry about the debt ceiling issue which, I believe, will surface again in July or August. If one were so inclined, one could track the performance of all of these instruments that I’ve mentioned above to get an idea of general market trend, risk appetite, and the momentum of both.

Of course, nothing goes up in a straight line forever, which is why I’ll be tracking the performance of the Major Indices relative to their channels and Fibonacci fan lines, as I discussed in last week’s market update. There you can see my projected channel ranges for each index to the end of Q2. You’ll find updated charts for those in my Addendum post to follow.

*N.B. Please click this link to see the Addendum post, as mentioned above.

Enjoy your weekend and good luck next week!

 

Share this post: