10 Technical Stock Market Developments To Monitor This Week

Mark Newton

The U.S. stock market indices, along with most of Europe and Asia, continued the equity rally last week.

In the U.S., February has now shown gains of nearly 5% for the S&P 500 Index over the first 10 trading days of the month.

As we look around the globe, here are 10 Technical developments across global equities:

1. China’s snapback was even more robust last week, with Shanghai Composite rising nearly 5% on the week, nearing important resistance

2. Momentum has not followed suit in the last few weeks, with negative momentum divergence now present on Daily, weekly and monthly charts

3. US Dollar gains occurred largely vs the Euro and Lat Am currencies like the Brazilian Real, and both broke down sharply vs the Dollar last week

4. Treasuries and Equities have continued to trend together and US 10-Year Yields look likely to test lows from last September after yields broke down under 1.59%

5. Crude and Copper both stabilized and the broader commodity space bounced after a very sharp period of underperformance in January

6. Gold and Silver both made encouraging near-term technical improvement that suggests further gains into end of February/early March before any peak

7. LatAM market continues to lag in recent weeks as the US Dollar’s strength has resulted in underperformance in ILF, outside of Mexico which has become a relative standout

8. Defensive sector rotation continues, as Utilities and REITS have both outperformed Technology while large SPX percentage groups like Financials and Healthcare have both lagged

9. Sentiment has gotten more bullish, as might be expected given Equity gains, with AAII now showing a spread of +14 % between Bulls and Bears

10. Seasonality should turn more bearish for the last two weeks of February into March after very strong early month performance in February of nearly 5% in US indices.

We can also add Apple’s sales warning (due to coronavirus) yesterday to the mix. That should weigh on tech stocks and needs to be monitored.

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Author has positions in mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.

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