Talk about a reversal of fortune — last week we identified early overbought conditions, only to finish the first week of May broadly oversold on strong downward reversion momentum. In fact, the S&P 500 (SPY) was lower for the week by -2.4%, leaving price just a dollar or so above monthly support.
In that last regard, even though the major sectors are broadly oversold, the momentum of this news-driven move on top of this being the third test of support within the past month along with recent broad market warnings has me more concerned than usual for the week ahead. It’s also true that monthly jobs reports often present market turning points. The major cascading fall in Liquid Fuels (DBE), otherwise an area of recent strength, was even somewhat reminiscent to me of, dare I say, last August as it was hit with the hat trick of a weak economic outlook, future margin increases, and dollar strength…. Let’s hope that’s all just “typical” bearish blogger hyperbole.
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