April 20, 2021
SPX: The S&P 500 (SPX) appears to be in consolidation mode after four straight weeks of gains totaling nearly 8%. The two prior pullbacks (~4% in late Feb and ~2% in mid-March) were preceded by 3 sessions of price trend deceleration that wasn’t immediately apparent this time around. Market breadth was broad during the recent 8% advance with little/no evidence of internal dislocation at the moment. The antennae is up as always, but slightly more watchful now with equity sentiment at bullish extremes and many positioning indicators stretched.
SVX: We continue to favor cycle/value sectors over growth stock in the intermediate term. The Nasdaq 100 (NDX) will likely struggle more than the SPX and the SPX will likely struggle more than the S&P 500 Value (SVX) index in the weeks ahead. The SPX acceleration over the past 4 weeks was based on its heavy weighting in the handful of names that also fall into the NDX. The past 4 weeks of growth sector leadership was counter-trend activity and we expect a resumption in cyclical/value leadership in the days ahead.