Grindstone Intelligence

Over the last month and a half, we’ve been asking ourselves, “Are these failed moves just false starts, or are they the start of something bigger?” It looks like we’ve got our answer: the bull market lives on.

What’s the biggest headwind for Financials sector bulls? It’s the January 2021 highs, which are once again acting as overhead supply after a failed breakout earlier this year. Can the Financials keep leading?

Was that a failed breakout for the Energy sector? Or just a false start? The S&P 500 Energy sector has been dealing with stiff resistance at the 2008 and 2014 highs for the better part of the last 2 years, and last month, we finally got that long-awaited breakout. Energy stocks hit their highest levels ever. From big bases come big resolutions.. or maybe no resolution at all? Rather than capitalize on the momentum, Energy bulls haven’t been able to keep the rally going. Now we’re on the verge of a big, nasty failed breakout.

The Industrials have come off their highs, but the decline hasn’t done any significant damage to the longer-term uptrend. While former leaders like Tech are stuck trading below key retracement levels, the Industrials are consolidating above theirs. We dug into the sector in today's note, starting at the top and then working our way down to the best individual stock setups. Read it here: https://lnkd.in/g_Fpyfrv

For the last month, the bearish signals have been adding up, and we’ve been forced to take them more seriously. So is this a pullback within an ongoing bull market or the return of the big bad bear? We weighed the evidence in this month's market outlook

We’re in the midst of the steepest market selloff of the year. The S&P 500 peaked back on March 28th, and has since fallen more than 5% from those highs. The big question is, was that the top, or just a top? We ran through our favorite breadth metrics to help us sort out what’s going on beneath the surface.

No sector was worse than Communication Services during the bear market of 2022, but no sector has been better since then. Now it's time to talk about that failed breakout

The small caps are on pace to close this week at their lowest level relative to the large caps since 2009.

The trouble began in early March, when the biggest and most important sector in the index ran into the 161.8% retracement from the 2022 decline. Momentum was putting in a bearish divergence at the same time, and now Information Technology has gone nowhere for the last 6 weeks as it digests the big gains from the prior 6 months.

In clear uptrends like the one we’ve been in, the market is innocent until proven guilty. One or two bearish signals can't keep us on the sidelines. Unfortunately, the bearish signals are adding up. If we zoom out to the index level, the Equal Weight S&P 500 Index is back below its 2022 highs. From failed moves come fast moves in the opposite direction.