Weekend Update

Short-term, the odds favor a continuation of the uptrend. Major support holds for SPX and Nasdaq as the market bounces from an oversold condition. VIX failed its recent upward breakout as it drops below support. A move in VIX like this tends to presage continued market strength, although we need to be mindful of VIX getting too oversold (measured by the gap from its 50-day EMA). Nasdaq has once again outperformed SPX (a positive sign). Market breadth has been improving. Continued relative weakeness in financials and strength in durables are cause for concern for equities. Recent strength in the dollar seems to be waning, although commodities are weakening too. No major inflationary concerns are anticipated in the intermediate term.

Neutral-Bullish short-term; Bearish intermediate term.