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Recovery In The Technology Sector Before Summer-Vacation Season

|Includes: DIA, IWM, Invesco QQQ ETF (QQQ), SPY

We stated in the previous report (https://seekingalpha.com/p/2zelq):

"... As the Technology sectors recovers, the other market indexes also become positive. ... If a few days ago, bearish sentiment was dominant on 20-day charts and it was Bullish on higher time-frames, now, we have Bullish sentiment on all time-frames. ..."

And the week ended on the positive note with Nasdaq 100 leading the up-move.

As of now, we have following long-term Breadth data:

70% of the S&P 500 index listed stocks are bullish which 2% more than a week ago% - Bullish Sentiment;
77% of the DJI index listed stocks are bullish which exactly the same as we had a week ago - Bullish Sentiment;
75% of the NASDAQ 100 index listed stocks are bullish which 3% more than a week ago - Bullish Sentiment;
64% of the Russell 2000 index listed stocks are bullish which 1% more than a week ago - Bullish Sentiment;
62% of the NYSE index listed stocks are bullish which 2% more than a week ago - Bullish Sentiment.
Source: https://www.marketvolume.com/quotes/highlowrangechart.asp

The market Breadth sentiment strengthened all across the market. More than 50% of stocks on all major indexes are bullish. As weakness in the technology sector is gone and the market is moving into the summer vacation season on a positive note. Summer-vacation season goes on the lower volume and lower volatility and it is safe to say that nothing going to shake off the long-term Bulls during this period. The long-term Bulls are in charge.

When we check shorter-term Breadth sentiment, we also see strong improvement. As of now, the majority of the S&P 500 listed stocks are bullish on all time-frames:

363 of the S&P 500 stocks are traded above their 200-day SMAs,
341 of the S&P 500 stocks are traded above their 120-day SMAs,
350 of the S&P 500 stocks are traded above their 50-day SMAs,
345 of the S&P 500 stocks are traded above their 20-day SMAs.
Source: https://www.marketvolume.com/stocks/select.asp?s=technical

Similar sentiment could be seen on the Nasdaq 100 and other major indexes. If a week ago, we had the dominance of the Bears on the 20-day time-frame, those who check the Breadth number on the daily basis saw the Bulls taking over the market at the first days of the week. Now, The Bulls are strong on all time-frames and short-term Breadth sentiment favors the Bulls for the coming week.

With respect to trading volume, past week brought us decline in volume (see chart #2 below). This is a positive sign for the Bulls, it confirms that the market calms down and that the summer-vacation season may starts earlier (usually it is last two weeks of August). We have positive Selling/Buying volume flow (SBV Flow on the chart #2 below) and we have stronger Bullish pressure (green UDV line on the chart #2 below) .

Also, we have flat volatility. We still do not see a decline in volatility (as should be expected before summer-vacation season), yet, we do not see increase in volatility either. This is also could be considered as a positive sign.

In summary we may say that the Breadth, volume and volatility data favors the Bulls for the coming week.

Chart #1: NYSE Breadth chart - green line shows bullish stocks and red line shows bearish stocks

Chart #2: S&P 500 volume chart

Chart #3: S&P 500 volatility chart

Charts source: https://www.marketvolume.com/free_trading.asp

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.