Technical Assessment: Bullish in the Intermediate-Term

Summary

The stock market tried its best to rally on Monday, but with major EPS reports, a Fed decision, and an employment report looming, higher prices attracted sellers and the major indices finished flat. This week could be a defining moment for the market, with stocks either continuing lower in the near term or with the pullback ending and new highs just around the corner. We would bet on the former, as there is no indication from the recent price action of the S&P 500, Nasdaq, and Nasdaq 100 that the selling is over. While the tech-heavy indices, industries, and mega caps have worked off overbought momentum conditions on a daily and weekly basis, we have not yet cycled into oversold territory on a daily basis. Do we have to? Absolutely not — but it probably would be healthy. The last time Technology indices/stocks were oversold on a daily basis was on April 19 — but just barely, with the 14-day relative strength index reaching 30. The last time tech was oversold on a weekly basis was in mid-2022 — and prior to that, during the pandemic. Long-term relative strength leadership rarely cycles into oversold territory on a weekly or mon