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The State of the Trend

Today we'll start by reposting the same chart from two weeks ago which shows the monthly SPX still holding above the blue trendline. A break below will be the first signal that a change in trend is under way:

S&P500 Monthly Chart
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And, although that's a positive for the market, we need to point out that last week marks the end of the seasonally strong first half of the year. Another reason for concern is the fact that SPX momentum has been declining for a week, and price is finally catching up:

S&P500 Momentum Chart

The list of concerns cannot be complete without mentioning the divergence between the SPX and the DJIA, and the broader indices like the NDX and IWM.

Which brings us to a story, just published by BI, about carnage in some high beta tech stocks. The companies in question are ALNY, BNFT, CLDX, CSOD, DDD, EXEL, FEYE, FUEL, GIMO, HALO, IMPV AND MKTO. To our surprise, out of more than 100 positive analyst recommendations (hold and stronger) for the group as a whole, there are only 2 sell recommendations, one for DDD and one for HALO. This prompted us to review the default weekly OT Signals ratings. There, by contrast, all the stocks received weekly sell signals in the period between February 24 and March 24, 2014:

Weekly Sell Signals Chart
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Gold and silver barely made it above key support levels on the back of escalating geopolitical tensions. In our opinion, it would be very naïve to expect a quick and amicable resolution of the conflict in Ukraine but, despite that fact, we cannot get bullish on gold until it breaks above the 50% retracement level:

SPDR Gold Trust Shares Weekly Chart
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