Volume, Volatility & Gold Spike

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This week’s commentary is the Big View bullets.

 

 

 

Every week we review the big picture of the market's technical condition as seen through the lens of our Big View data charts. The bullets provide a quick summary organized by conditions we see as being risk-on, risk-off, or neutral.  The video analysis dives deeper.

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Summary: The indexes continue to be news driven, reflected in the fear index (VIX) and Gold. On a technical basis, the move on Wednesday with record volumes shows a potential short-term bottom. Overall, neutral short term to risk-off intermediate to longer term

 

Risk On

• Volume patterns improved this week with one of the highest volume days ever on the explosive Wednesday rally. (+)
• Sector rotation is showing 12 of 14 sectors up with semiconductors and technology leading, with many tech stocks having a bullish engulfing pattern. 
• The number of stocks above key moving averages bounced off its extreme oversold levels and looks like they could trend higher. (+)

Neutral

• Market volatility remains elevated, with a violent rally off the lows Wednesday (largest 1-day gain in S&P history). Short-term, we could continue to see a rally to the 200-Day Moving Average, though the tariff situation remains very unclear and prone to news-driven moves and the S&P may be moving into a bearish phase. (=)
• The risk gauges are closer to neutral with the improvement in SPY/TLT and HYG/TLT ratios. (=)
• Volatility, after matching its August 2024 highs, backed off. A new high in volatility would be alarming. (=)
• Value’s recent outperformance flipped back in favor of Growth over the short run, but the longer-term trend remains intact. (=)
• Foreign equities continued to lead the U.S. over the last several months and are about even in the last couple weeks. All equity markets remain under pressure. (=)
• April is usually a reasonably strong month for equities seasonally, though they are lagging this year with the tariff disruptions. (=)

Risk Off

• Contrary to the bullish leadership this week in Technology and Semiconductors, Gold made new highs and gold miners exploded up +20% this week, a concerning signal given all the pressure in equities. Looking at 3month returns, gold miners, staples and utilities were all positive, a clear risk-off signal. (-)
• Despite the huge rally, the McClellan Oscilator is still negative. (-)
• The 52-week new high new low ratio remains negative, though is flattening out at low levels. (-)
• The color charts, with the exception of the Nasdaq on the shortest term reading, are all negative. (-)
• All members of the modern family are in bearish phases with two members (IBB & KRE) actually negative on an otherwise strong bounceback week for the market. All of them with the exception of retail are underperforming the S&P. Regional banks and financial sector were weak, a concern with the dollar under pressure and potential changes to global finance and economic activity. (-)
• Soft commodities are outperforming equities. (-)
• Parabolic move in gold, reaching overbought levels. Trend is strong, but risk on a mean reversion pullback is elevated. (-)
• The dollar brock below its 200-Weekly moving average for the first time in several years. A falling dollar poses a risk to markets. Bitcoin continues to hold and outperform the market and raises questions about its roll relative to the dollar and foreign currencies. (+)