Market Analysis (06 April’21)

Major U.S. stock indexes edged lower Tuesday, a day after notching all-time highs on signs of rapid economic recovery.

S&P500

The S&P500 futures continued to consolidate today right below yesterday’s all time highs at the 4075 level. Bullish momentum will continue once the index moves above this short-term supply zone. The bear case can be in play ONLY if ES / SPX drops below the 4000 level, which might potentially form a failed break out pattern.

ES, 4h

Market Breadth

Several market breadth indicators suggest that the recent market strength should lead to higher prices. I discussed the Advance-Decline lines in my previous posts but today I would like to focus on the percentage of the S&P500 stocks above their 200d MA. This indicator shows no bearish divergences in place at the moment — compare this to the February 2020 instance when the same indicator formed a very pronounced bearish divergence (see chart below).

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