The stock market had a somewhat choppy week with a late decline on Tuesday, but stocks moved higher on Wednesday and Thursday. Economic reports like Consumer Sentiment and GDP were higher than expected, while Consumer Confidence was slightly lower. The PCE Friday report was mixed, but stock futures were unaffected as they moved above March highs in early trading on Sunday night.
The markets saw over 4% gains in the Dow Jones Utility Average, NYSE Composite, and Russell 2000, with the S&P 500 and Dow Jones Transportation Average gaining over 3%. The Nasdaq 100 was up just over 2%, while the Dow Industrials were also up around 2%. However, the Nasdaq 100 was the only index that was lower for the week, down 0.4%.
The SPDR Gold Shares (GLD) gained 2.7% for the week and 9.2% for the month, while the iShares Russell 2000 saw a 2.7% increase. The S&P 500 and Dow Industrials were up less than 1% for the week. On the NYSE Composite, 1963 issues were advancing compared to just 950 declining. More stocks were making New Highs than New Lows on both the NYSE and Nasdaq Composite.
The monthly chart of the Spyder Trust (SPY) shows strong gains for the past five months, with the monthly starc+ band for April at $528.75. This is not far above the March close at $523.21. The S&P 500 Advance/Delcline line has been bullish for most of the past 15 years and has often led prices higher. SPY had a March high of $524.61, well above the starc+ band at $514.93, indicating it is in a high-risk buy area.
As Wall Street strategists continue to raise their year-end targets, there is a possibility of a new decline focused on sector rotation rather than a similar percentage decline. The growth/value ratio chart of the iShares Russell 1000 Growth (IWF) shows support at line a, suggesting growth ETFs like IWF may continue to be weaker than IWD. The MACD and MACD-His have been diverging since late last year, indicating a potential major top in the growth/value relationship. We may see some negative technical readings for growth ETFs in the coming days.
In summary, despite a slightly choppy week in the stock market, the overall trend remains positive with gains in various indices and key economic reports. The markets are showing strength with more stocks advancing than declining, and the SPY chart indicates strong gains in recent months. However, caution is advised as the market may be reaching a high-risk buy area, and there are signs of potential sector rotation and a major top in the growth/value relationship. Investors should keep an eye on technical signals and be prepared for possible market shifts in the coming days.
