Bulls are once again flying high, while bears are eating crow as the week draws to a close. S&P Futures are on pace for their sixth consecutive week of gains capped off by another move up to 3,111 last night, as the weekly RSI is making new highs above its previous peak in July. However, not everything about this rally looks as strong as it could be yet.
Contrasting with the RSI, the /ES daily MACD has been trending down for two weeks. Small-caps are once again the odd man out, with Russell Futures trending downward since Nov. 5 despite the other three major index futures logging new all-time highs. Emerging Markets Futures are also struggling. The /MME contract (which tracks China, Brazil, India, Russia, and others) is off about 3% since its recent highs on Nov. 7 as reports of slowing global growth continue.
The NYSE and NASDAQ Advance/Decline Lines have both been trending down since Nov. 5 as the indexes rise, which is typically regarded as bearish because it suggests that fewer stocks are participating in the rally. Investors now must decide if this rally is a FOMO-driven melt-up, or bears getting squeezed out of short positions, or Trade War optimism… or simply the next leg up.
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