1/ FANGs Breaks Higher
2/ Bullish Divergence
3/ Dollar Bounce
4/ Mixed Signals
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1/ FANGs Breaks Higher
The widely recognized acronym, FANG, is employed to characterize large-cap growth technology stocks. The $NYFANG index has recently surged beyond its technical structure and is now making positive strides towards resistance at approximately 8100.
These stocks represent some of the most valuable entities in the stock market, with a predominant focus on enduring technology growth trends such as artificial intelligence, cloud computing, online gaming, and state-of-the-art hardware and software.
The index is on the verge of reaching its all-time high following a breakout from the base established between 2022 and 2023. A preliminary attempt to ascend to higher levels in June proved unsuccessful, but the potential attainment of new highs could significantly impact market sentiment, providing a boost as the market looks to its leaders for guidance.
2/ Bullish Divergence
The equal-weighted S&P 500 index is not having a good time. The index is in a short-term downtrend within this sideways movement.
The recent rebound, after establishing a new 52-week low, showed an RSI showing signs of bullish divergence, as, unlike the price, it did not establish new lows.
The counter trend move did not have a strong momentum and the price failed at the resistance level and pullbacks. We have to keep waiting to see if the index finally breaks above resistance or if it is the beginning of a new swing low.
3/ Dollar Bounce
The US dollar is retracing its gains following recent breakthroughs above resistance. Once more, we observe a previous resistance transforming into a potential support.
It’s important to note that we’re not asserting the permanence of the price above this level, but it presents a compelling possibility.
The RSI indicates a bullish divergence that has already propelled the US currency beyond the 105 level. A bullish scenario might pose challenges for the stock. Conversely, breaches below that level could potentially elevate the market into a new bullish rally.
4/ Mixed Signals
The chart below illustrates ratios providing insights into the market’s risk appetite.
The upper chart depicts the ratio of High Yield Bonds to U.S. Treasury instruments, which has been steadily increasing since 2020.
The two charts below highlight the ratios of high beta stocks versus low volatility stocks and the traditional consumer discretionary versus consumer staple ratio.
While the three ratios may not all align in the same direction, it can be inferred that overall risk appetite remains positive, despite the prevailing negative news environment in the market.
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Originally posted 9th November 2023
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