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Premium daily stock trading service by Monica Kingsley. She provides extensive analyses and comments at least 1 time per trading day, usually before the opening bell, plus whenever dictated by market action. The analyses focus on all the key factors essential to determining the medium- and short-term outlook for the S&P 500 futures, spanning over several time frames, credit markets and S&P 500 sectors and ratios. They also capture the key fundamental developments, events and trends in assessing the prospects and health of the S&P 500 moves. This way, you’re kept up-to-date on important developments that far too many investors are apt to miss or underestimate.

Whether you're looking for objective analyses to broaden your horizon / add confidence to trading decisions, or want to get inspired by Monica's trade calls for S&P 500 futures, Stock Trading Alerts are the way to go.

  • Stock Trading Alert #3

    August 4, 2020, 11:38 AM

    Available to premium subscribers only.

  • The Slow S&P 500 Grind Higher Is Still On

    August 4, 2020, 9:14 AM

    The bulls are showing real staying power above the early June highs as Friday's bearish candle marked not a upcoming downside reversal, but a bullish comeback. Following yesterday's slow but sure climb, the rally's internals understandably improved. But isn't too much greed present in the market place?

    It rose a notch, but isn't roaring back. Far from it - even the data for the week ending July 29, show that 20% bulls faced 49% bears while 31% investors had a neutral outlook (AAII). This is not what all out greed looks like, and as such, it can power the upswing higher - regardless of the put/call ratio moving down these days.

    You know what they say happens when too many people get to one side of the boat...

    S&P 500 in the Short-Run

    I'll start with the daily chart perspective (charts courtesy of http://stockcharts.com ):

    This breakout attempt above the early June highs has legs, and yesterday's lower volume after Friday's high-powered reversal, is no obstacle. It's actually consistent with the path many uptrends in bull markets take. Prices haven risen as not enough sellers were willing to step in - that's how I read it.

    Let's check how did the credit markets.

    The Credit Markets' Point of View

    High yield corporate bonds (HYG ETF) didn't exactly keep all their Friday's gains intact, but didn't profoundly decline either. Monday's candle is one of consolidation, and its volume says that it would be very premature to look for signs of an impending reversal.

    The caption says it all, and both leading credit market ratios - high yield corporate bonds to short-term Treasuries (HYG:SHY) and investment grade corporate bonds to longer-dated Treasuries (LQD:IEI) - are moving in lockstep higher, with the more risk-on one doing relatively better these days.

    While that makes HYG:SHY vulnerable to short-term gyrations, unless LQD:IEI also rolls over, it would be a very temporary development. For the record, I don't look for either ratio to roll over, and see them as supporting the stock upswing.

    The chart of stocks to all Treasuries ($SPX:$UST) highlights the progress stocks are making relative to the safety of instruments backed by the full faith and credit of the U.S. A breakout above the early June and mid-July highs is arguably a matter of time only.

    The overlaid S&P 500 closing prices (black line) against the HYG:SHY ratio don't scream danger for stocks. The rebound leaves stocks a little extended in the very short-term, but also reveals their readiness to lead.

    As I am not looking for the HYG:SHY ratio to roll over, the stock upswing looks set to reach higher over the nearest sessions.

    Smallcaps and Emerging Markets

    The S&P 500 closing prices overlaid with the Russell 2000 (IWM ETF) paints a bullish picture of short-term smallcaps resilience. It needn't be an issue that yesterday's IWM upswing occurred at smaller volume - I look to the close near the daily highs as more important from the momentum point of view.

    As long as the 200-day moving average in IWM doesn't see prices retreating to its proximity, the dynamics of the smallcaps move bodes well for the 500-strong index.

    Emerging markets (EEM ETF) are taking a short-term breather, which is perfectly understandable now that the dollar is finally showing some signs of life. So, the light has turned from green to amber based on this chart alone.

    But as higher highs and higher lows are the norm these weeks, the S&P 500 path of least resistance remains up.

    S&P 500 Sectors in Focus

    Technology (XLK ETF) has risen again, and it doesn't have to thank Apple (AAPL) for that. This highflyer suffered a daily setback, and gave up most of its intraday gains, by the way. The key thing though is the gradual return of momentum into the sector.

    Healthcare (XLV) indeed delivered an upside surprise, and materials (XLB ETF) aren't too far from stabilizing and moving higher next too. Defensives (utilities and consumer staples - XLU ETF, and XLP ETF respectively) maintain their strong posture as the leading sectors in the currently unfolding rotation. Also, I look for financials (XLF ETF) to start catching up a bit more visibly.

    Summary

    Summing up, Monday's trading extended the S&P 500 gains amid improving rally internals such as the advance-decline line moving to positive territory with plenty of room to grow. Volatility's ($VIX) spike lower is also a welcome preview of things to come. The credit markets' posture in corporate bonds' ratios isn't merely on account of briefly pausing Treasuries (yes, I am looking at you, long-dated ones - TLT, TLH). While these indicate a possibility of the S&P 500 briefly declining, it's the smallcaps and emerging markets resilience that keeps painting a rather bullish picture for stocks.

    Thank you for reading today's free analysis. If you would like to receive daily premium follow-ups, I encourage you to sign up for my Stock Trading Alerts to also benefit from the trading action described - the moment it happens. The full analysis includes more details about current positions and levels to watch before deciding to open any new ones or where to close existing ones.

    Thank you.

    Monica Kingsley
    Stock Trading Strategist
    Sunshine Profits: Analysis. Care. Profits.

  • Stock Trading Alert #1

    August 4, 2020, 3:59 AM

    Available to premium subscribers only.

  • Stock Trading Alert #3

    August 3, 2020, 1:20 PM

    Available to premium subscribers only.

  • S&P 500 Bulls Pulled a Rabbit Out Of Their Hats

    August 3, 2020, 9:00 AM

    Just as I called for, the bulls are winning in the battle to break above the early June highs lastingly. And it's not through technology, communications or the defensives - the other sectors keep more or less standing ground.

    So, can I wave off the selling pressure right after the opening bell? In today's analysis, I will look at this shot across the bow, and examine the extent to which the bulls should be concerned, or not.

    I reaction to Q2 tech earnings indeed overpowered the dismal quarterly GDP figures and struggling job market. Right or wrong, the stock market takes a rear view mirror look at this historic GDP plunge, treating it as a mere mini-depression. It chooses to ignore the fact that more than 54 million Americans have filed new claims for unemployment benefits, and that a total of 118 million working age Americans aren't working (the labor participation rate in June stood at 61.5% only).

    With the new stimulus around the corner, it's betting that the unprecedented plunge in personal consumption (concentrated in services, not goods) and likewise steep dive in consumer sentiment, would be over. Right now, such bets are still paying off.

    S&P 500 in the Medium- and Short-Run

    I'll start today's flagship Stock Trading Alert with the weekly chart perspective (charts courtesy of http://stockcharts.com ):

    After preceding week's hesitation, bullish price action revived the weekly chart again. On solid volume, prices closed above the early June highs. All by themselves, I don't see the extended weekly indicators as a cause for concern - such rationale has to stem from the daily chart, so let's check that one next.

    Another breakout attempt above the early June highs is officially in, and its rising volume is encouraging. Or does the bearish candlestick bring more than its fair share of caution? Without a downside reversal in the nearest days, the candle merely tells a story of a successful reversal of Friday's losses.

    The credit markets still lean the bullish way.

    The Credit Markets' Point of View

    High yield corporate bonds (HYG ETF) extended gains on Friday, having earlier repelled the bears. The lower volume isn't an issue when examining the previous volume spike. Take a look at late June, and the relative volume differential in the session following the washout one. That's why I see Friday's decreasing volume vs. Thursday's high one, as no cause for concern.

    Both the leading credit market ratios - high yield corporate bonds to short-term Treasuries (HYG:SHY) and investment grade corporate bonds to longer-dated Treasuries (LQD:IEI) - are broadly supporting each other. And that bodes well for the stock upswing to go on.

    The ratio of high yield corporate bonds to all corporate bonds (PHB:$DJCB) is in an uptrend again, and such return of the animal spirits in bonds is constructive for the stock market bulls.

    The ratio of stocks to Treasuries ($SPX:$UST) paints a bit more cautious picture. Yet, its message is still of the stock bulls enjoying the benefit of the doubt.

    The overlaid S&P 500 closing prices (black line) against the HYG:SHY ratio show that Friday's close didn't leave stocks in a dangerously extended position. Should the HYG:SHY tailwind last as I see it likely to, then stock prices have a floor nearby.

    Smallcaps and Emerging Markets

    The Russell 2000 (IWM ETF) is trading weak on a very short-term basis - it didn't manage to even close unchanged while the S&P 500 moved up. Should they have performed better, that would point to a more broad-based advance within the S&P 500 - and indeed, the daily market breadth indicators in the 500-strong index have seen better days, politely put. But back to smallcaps.

    Indeed, the IWM ETF is in a vulnerable position after having defended its 200-day moving average. Should its weakness take a more impactful turn, that would surely affect the S&P 500.

    Emerging markets keep their healthy consolidation going, and are slowly again approaching their early July highs. This chart's message certainly isn't bearish for the S&P 500.

    S&P 500 Sectors in Focus

    Technology (XLK ETF) is all the rage again, making new 2020 highs. Pretty extended, but the much talked about correction, hasn't come and isn't really here. The key driver of Friday's S&P 500 isn't disappointing.

    Crucially, semiconductors (XSD ETF) aren't underperforming in any dramatic fashion. Dramatic - that's an understatement, because one day's weakness doesn't cut that. Move on, no crack in the dam here.

    Healthcare (XLV ETF) merely refused to decline profoundly on Friday, and isn't really acting as a market leader over the past few session. Step aside though, and the chart is healthy, and I look for an upside surprise here quite soon. Perhaps some more vaccine news slash hype would help the lackluster financials (XLF ETF) performance too.

    Summary

    Summing up, Friday's S&P 500 reversal is keeping the breakout attempt above the early June highs alive. Credit markets keep acting strong, and the rise in Treasuries just serves to power the TINA (there is no alternative) trade as it pushes investors farther out on the risk curve. Farther than they would be comfortable, but still helping the stock bull at the moment. One of the key watchouts is the daily market breadth, where both the advance-decline line and advance-decline volume remain in the bearish territory. Overall, the balance of risks remains skewed to the upside, though the bulls would benefit from a tight stop-loss locking recent gains.

    Thank you for reading today's free analysis. If you would like to receive daily premium follow-ups, I encourage you to sign up for my Stock Trading Alerts to also benefit from the trading action described - the moment it happens. The full analysis includes more details about current positions and levels to watch before deciding to open any new ones or where to close existing ones.

    Thank you.

    Monica Kingsley
    Stock Trading Strategist
    Sunshine Profits: Analysis. Care. Profits.

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