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The S&P 500 was in a precarious position this past week, but my key area within the 5,265 to low 5,270 range held on Thursday, and I preferred a long bias going into Friday. The key goods orders data came in above expectations, but it was not as hot as feared. 

Therefore, stocks ran with it – and I consider it essential that the Nasdaq led, as it bounced above the pre-Nvidia earnings level while the S&P 500 did not. So, we have the bull upleg ingredient in place, just as much as the potential for a steep Nasdaq reversal that‘s not a function of just Nvidia (or Dell Technologies).

Communications and consumer discretionaries did well while bonds did their best to climb the wall of worry of incoming data painting a resilient economy ahead with sticky inflation that‘s not going away. In this light, Friday‘s revision to consumer confidence and inflation expectations was mostly positive for risk taking. 

Therefore, I say that the right sectors are leading: tech, financials (all eyes are on the financial sector recovering from two cold water pronouncements), and consumer discretionaries (it‘s not just Amazon – Lululemon, Abercrombie, American Eagle, e.l.f., Ralph Lauren, and even Target have experienced trouble declining).

The sectoral mix was right, in that financial and industrials rose as well while defensives didn't crater – and once again, the lower volume or inside bar on Friday isn't an issue. I‘m counting on tech, and of course Nvidia and beyond, to lead.

And what do I expect from next week‘s economic data? As promised, I am sharing what all clients had at their disposal during European trading hours on Friday – the reasoning as to why I was bullish to the point of doubting the slide on Thursday before the close.

Let‘s move right into the charts, which are courtesy of StockCharts. Today's full scale article contains five more charts, along with commentary.

Credit Markets

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The best thing about this chart is HYG's relative outperformance. A break above Thursday‘s highs would be a gift to the stock market bulls, who can then do the same.

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Yields overall flashed an amber light, not a red one. For as long as rate hike(s) don‘t get factored into expectations, for as long as the September cut remains in the game (it‘s merely a coin toss now), and for as long as perceptions are of inflation getting off the ground while the economy doesn't slow down below a soft landing, stocks are fine –  that is, that was especially true until Thursday.

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