Week Ahead: Buying Dip Or Aging Bull Market's Last Hurrah?

All U.S. major indices fell every day last week Recent small cap outperformance suggests rising inflation Treasurys slide signals more pain for equities Dollar and WTI forming bullish patterns

After markets saw their worst week this year, capped on Friday by the weakest since September 2017, it’s hard not to wonder whether next week we’ll be seeing a buying opportunity or the final rally before the equity bull market comes to an end.

The selloff in U.S. stocks extended across the full trading week, for a fifth day, and the slumped. Though each of the four major U.S. indices—the , , and —rebounded to close well off their intra-day lows, they all still sealed the worst week since the pre-Christmas rout. Declines were seen every single day last week, wiping out two-and-half weeks worth of gains.

Corrective Rally Within A Downtrend

The S&P 500 Index fell on Friday, -0.21%, led by shares (-1.87%), the clear underperformer, which tracked sagging prices. The sector lagged far behind the second worst performer, (-0.7%), shares (-0.21%), though in the red, were far behind. Defensive (+0.35%) outperformed.

For the week, the benchmark index dropped 2.16%. Once again, Energy (-3.84%) underperformed, followed very closely by Health Care (-3.82%), a sector that’s very much in focus given Democrat’s “Medicare-for-All ” push. Utilities (+0.74%) and Real Estate (+0.3%) were the only sectors in the green.

SPX Daily

Technically, the SPX was stopped dead at the 2,800 level. It’s the highest point hit since the post-Christmas bounce, but as we’ve previously noted, it’s a correction rally from the September record, after the index posted descending series of peak and trough, completed in December at the 2,600 level (black horizontal line).

Since the Oct. 17 peak of 2,816.94 (red line) was not bested, we maintain the above

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