Bullish Market, With a Few Warning Signs

TopdownCharts
08-18

This week’s charts continue to show a decidedly bullish market.

📈 Breadth is improving.
The equal-weighted $S&P 500(.SPX)$ is starting to outperform the cap-weighted index, suggesting the rally is broadening beyond the mega-cap names. That’s generally a healthy sign for the market.

💰 Earnings are getting stronger.
Earnings revisions are surging, with a solid macro backdrop providing additional support. At the same time, higher prices are boosting investor confidence, sentiment and equity allocations.

⚠️ But the rally isn’t risk-free.
Seasonality is becoming less favorable, the Magnificent 7（ $NVIDIA(NVDA)$ $Apple(AAPL)$ $Alphabet(GOOG)$ $Microsoft(MSFT)$ $Amazon.com(AMZN)$ $Meta Platforms, Inc.(META)$ $Tesla Motors(TSLA)$ ） are starting to stall, credit breadth is weakening, and rising rates could eventually become a headwind.

🐯 Bottom line

Strong trend + improving breadth + solid macro + rising confidence = bullish setup.

But the shadows are getting harder to ignore: overconfidence, weaker seasonality, stalled mega caps and higher rates. The rally still has the upper hand, but these are the signals worth keeping on the radar.

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

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