Tactical Outlook: April 18, 2024
Tactical Outlook: April 18, 2024
Still bullish.
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Discussion
In the March WOTE Report I rated the tactical outlook “neutral” with SPY at $523, and when SPY pulled back to the 20dma circa $519 I upgraded it to “bullish” on the projection that there was a high probability of at least a 5% rally over the ensuing 8 weeks, per the rating system below.
With SPY instead pulling back to around $499, a decline of -3.9% from $519, for now that assessment looks like it will end up being wrong (there are still 6 weeks remaining on the call).
From here (circa SPY $500), however, the tactical 8-week outlook is unequivocally bullish.
One of my top tactical indicators - the % of advancing volume as a % of total volume - is firmly in oversold territory.
Bullish breadth divergences have emerged yesterday and today.
IG CDX is beginning to top out.
And as discussed twice today (see here and here), Janet Yellen sold a put last night, setting a clear strike price beneath SPX less than -5% off the ATH.
A 5% rally from SPY $500 to a new ATH of $525 may seem like a stretch from here, but over an 8-week period that covers a likely bullish May 1 QRA, $525 is high odds given the oversold condition of a variety of tactical indicators.