The quite rare Zweig Breadth Thrust (ZBT) last week has been supported by the early action this week which adds further weight to the bullish case. This is quite interesting in light of the major earnings out this week from Microsoft (MSFT) and Meta Platforms (META) after the close today.
They will be followed on Thursday by earnings from Apple, Inc. (AAPL) and Amazon.com (AMZN).
All of these four stocks have performed quite well over the past 5 days led by a double-digit gain for META up 10.83%. There are solid gains for the other stocks with 8.2% for AMZN, MSFT + 7.4%, and AAPL up 5.7%. During the same period, the S&P 500 (SPX) is up 5.16%.
These six-month charts all show the steady declines from early in the year. The declining 20-day MAs (blue) for all are below their 50-day MA (in red) despite the recent sharp gains. Below the candle charts is plotted the relative performance (RS) which reflects the ratio of the stock price to the S&P 500.
All except MSFT are lower than the SPX over the past month except MSFT as it is up just over 4%. Over the past three months, all four stocks have been weaker than the SPX which is down 7.92%. The worst performer has been AMZN which is down 20.96%.
On the charts above only the RS pattern for MSFT shows signs of a bottom as it has formed higher lows, line b. A move in the RS for MSFT above the downtrend, line a, would be a positive development. The lower lows in the RS for the other three stocks and the sharply declining MAs suggest it is too early for a sustainable bottom.
As for the overall market, the Spyder Trust (SPY) is up 0.7% this week and is well above the tentative May pivot at $534.51. The declining 50-day MA is at $559 and the 100-day at $577.85. The 20-day EMA has turned up slightly at $541.49 and represents good support.
More importantly, the S&P 500 A/D line has now moved above the major resistance at line a. This indicates that the decline from the late 2024 highs is over. A retest of the breakout level is always possible, especially with the key earnings and monthly jobs report this week.
The NYSE Stocks Only A/D line is still below its downtrend, line b, but is well above its EMA which is now rising. The NYSE All A/D line closed at its downtrend, line c, as the short-term resistance at line d, was broken last week.
The Nasdaq 100 A/D (not shown) has also completed its correction and the relative performance indicates that QQQ is starting to lead the SPY. Based on the data through Tuesday’s close, all the weekly A/D lines should close positive this week. These developments further support buying on market corrections.
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