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Good morning CVELU,
The market continues to feel like a classic sideways kangaroo market, so patience remains important. The XJO is starting to show some signs of weakness and now needs to hold above 8,680. If that level breaks, the technical picture could turn bearish quite quickly. On the upside, a decisive break above 9,000 would be a strong signal that the broader bull market has resumed. Until then, it's worth staying cautious rather than becoming overly aggressive.
Oil has done exactly what we discussed a couple of weeks ago, bouncing strongly from support and continuing to trend higher. That keeps the energy sector looking attractive. Unfortunately, commodities have broken below a major technical level, leaving the bigger picture bearish. While we could still see some short term rallies, they are likely to be countertrend moves unless the broader structure improves.
Utilities are showing renewed strength after bouncing from major support, while consumer staples continue to hold up well. Healthcare is another sector worth watching. Meanwhile, US markets remain very extended and are beginning to show signs of weakness. Overall, a defensive approach still makes the most sense, with energy, utilities, healthcare, and consumer staples remaining the standout areas.
Have a great week.
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