Research Summary
The report discusses the current state of the stock market, focusing on bullish breadth thrust signals, historically bullish technical developments, negative sentiment, and the potential for growth in Japan and the crypto market. It also highlights the strong reversal of small-caps at a key level, the bullish implications of the low reading in the NAAIM oscillator, and the potential for a bullish breakout in Japan’s Nikkei 225.
Key Takeaways
Small-Caps’ Strong Reversal
- Reversal at Key Level: Small-caps experienced a strong reversal at a crucial level, avoiding a significant technical breakdown and moving back within their broader sideways range. This reversal was backed by the recent BofA Bull & Bear buy signal, indicating a negative sentiment over the past few weeks.
Bullish Implications from NAAIM Oscillator
- Positive Forward Returns: The report points out the bullish implications from the low reading in the NAAIM oscillator. Historical forward returns for past readings skew heavily positive, suggesting potential growth in the market.
Breadth Thrust Indicator Signal
- Positive Thrust: The breadth thrust indicator signaled a positive thrust with the percentage of stocks above their 10-day moving average increasing. The value of breadth thrust signals significantly increases when a cluster of them is observed over a short period.
Japan’s Potential Bullish Breakout
- Nikkei 225’s Long-Term Chart: Japan’s Nikkei 225 continues to show one of the best long-term charts, with a tight 6-month pullback following a large bullish thrust. The report suggests that the market is increasingly ripe for a bullish breakout.
Crypto Market’s Strong Relative Strength
- Positive Backdrop for Crypto: The report highlights the strong relative strength of BTCUSD over the past few weeks. The strategic bias for BTCUSD is trending up to new highs for the year, indicating a positive backdrop for the crypto market.
Actionable Insights
- Investigate the Potential of Small-Caps: Given the strong reversal at a key level, it may be worth exploring the potential of small-caps in the current market scenario.
- Consider the Implications of the NAAIM Oscillator: The low reading in the NAAIM oscillator and its bullish implications suggest that it could be beneficial to consider its impact on investment strategies.
- Monitor Breadth Thrust Indicators: The positive thrust signal from the breadth thrust indicator suggests that it could be advantageous to keep a close eye on these indicators for potential growth opportunities.
- Assess the Potential of Japan’s Market: The potential bullish breakout in Japan’s Nikkei 225 indicates that it could be worthwhile to assess the potential of this market for future growth.
- Explore the Crypto Market: The strong relative strength of BTCUSD suggests that it could be beneficial to explore the crypto market and its potential for growth.
