Weekly Technical Analysis –“SP500 Near Term Overbought” 29th Oct14

We have a cut down technical update this week due to the Swiss team and AG traveling.

Equities have bounced further and faster than many predicted with the sp500 having over achieved sp500 1985 yesterday) the Swiss team’s target of 1950.

Sector wise technology and biotech are leading the charge with the biotechs scoring a strong break out of their prior highs. Apple is leading the technology pack with a significant breakout of her prior high. Europe is lagging and cyclical commodity stocks badly lagging. Housing and banking are also lagging.

Breadth across many sectors has improved, notably ssp500 stocks making new 52 week highs has surpassed sept levels. Ie we have more 52 week highs at 1985 than we did at when the sp500 was over 2000 back in Sept. Many stocks have significant momentum here it seems. The Nasdaq 100 hasn’t seen such a high score of new 52 week highs since March 2014.

Note when strong levels of new 52 week highs were scored it was usually upon price achieving breakout new higher highs. Here we see the nasdaq100 scoring strong breadth without scoring new higher highs in price. Positive divergence in fact albeit at over bought momentum levels.

The smaller cap sp600 has the highest level of new 52 week highs since March. And so it goes on. Even the broader nyse has scored strong breadth even as price struggles indicating that post a correction in momentum a reattempt at prior highs is likely to occur.

Its been a blood bath for many bear camp shorts that weren’t able to adapt to the changing signals. The put call ratio testifies to, as below. Huge option hedges were placed into the market and almost all have now reversed. (Even short term volatility indexes are coming back to low levels). Investor sentiment has bounced back very strongly (a bit too strongly) and is once again close to contrarian levels. The total put call ratio, having leap to a +4 standard deviation is now back to her mean level. I don’t want to blind you with indicators here but, post a minor corrective sell off to reset momentum divergences (and likely some chop) US equities appear ready to retest their prior highs.

Without more delay here the tech guru Fitzpatrick at Citi feeling bullish

cb-wklyteh-24-10-14

Here the team at JP (ems)

jp-em-24-10-14

And here CS with their investment weekly:

cs-investwkly-25-10-14

And here MS with their wkly FX tech report:

fx-tech-27-10-14

I have more reports to update with which i will do in the next 24hrs. We have had a few technical problems with our web server. Apologies for this but every thing is now working fine again.

All the best

Rich