The S&P 500 cash index had a great week last week, but it closed on a weak note by falling below the previous all time high on Friday. It is a good sign that S&P 500 was able to make a new all time high on Thursday, but caution is needed at this price level.
Technically the S&P 500 cash index is 14th day into the first daily cycle, it has entered top timing band in the beta cycle of the daily cycle which is why we had preferred the breakout to take place on the 8th day. Typically when a breakout happens in the first 8 days, it has further energy to prolong the daily cycle into a long cycle which could be a 25-day cycle. It is still a good sign to make a new all time high, despite the reluctance.
The NASDAQ is much weaker than the S&P 500 cash index. It lost 0.2% Friday with heavy volume. The action in the Nasdaq was sufficient to qualify as distribution, which is a sign of institutional selling. One day of distribution doesn’t change the present up trend. Four or five distribution days over several weeks are needed to signal that stocks have topped and are heading for a downturn. When the Friday’s low is taken out, it would confirm the daily cycle top is in place. So it’s realistic to expect the market to be sideways down next week. The high flying growth stocks have taken a beating last Friday, lost much more than the NASDAQ.
Next week is filled with catalysts that could move the market in a big way. Lennar, Fedex and Micron will release earnings report on Tuesday. These companies can tell a lot about the state of economy and how the market pays attention to the earnings instead of hoping for easy money policy and trade war news. The G-20 meeting is another important event. The market is not expecting a deal out of G-20, maybe Trump will not put on additional tariffs. No one knows for sure what to expect.