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The S&P 500 advance decline line made a record high to end last weeks trading. An obvious bullish divergence as price remains almost 10% below its February highs. A harbinger of things to come?

Possibly. Bear market rallies usually don’t push much higher than the 61.8% retrace level. It doesn’t make much sense from a fundamental perspective, but I can’t deny the technical strength any longer.

56% of S&P 500 stocks are now above their 50 day MA, while 44% are above their 200 day. Both the S&P 500 and the Nasdaq traded through and closed above their liberation day gaps.

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The market has recovered more of its losses than I anticipated. There remains at least one important resistance level, which would be the 50 week moving average (or 200 day moving average) – blue line in the above chart which currently comes in around 5704.

We touched that level at Friday’s close and so far there has been some push back by the bears.

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While the US market continues to struggle to get back the ground its lost, international stocks have already made new record highs. The combination of the falling US dollar and the fact that international stocks are not heavy in technology like their US counterparts (where Tech is the main sector getting hit in this sell off), has finally given globally diversified investors a reason to be happy.

To summarize, from a technical perspective its starting to look similar to the 2020 COVID comeback. Still, a 25x PE at 1.0% interest rates like we had back in 2020, is a whole lot different then a 22x PE at a 4.3% rate. I remain invested, but underweight US stocks and overweight international. I’m not chasing this but I’m not fighting it either.

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