Summary
The S&P 500 (SPX) closed at a minor all-time high on Tuesday — and while others are calling this a breakout, it isn’t good enough for us. Initial volume on the SPY ETF was far below the 50-day, 100-day, and 200-day averages, and not what we want to see as the index moves into uncharted territory. Breadth was just okay, with sector strength from Energy, Materials (again), Utilities, Information Technology, Industrial, and Financial. Communication Services was hurt by a 2.8% decline in META as its 20 consecutive daily gains finally ended. Consumer Discretionary fell on weakness in Specialty Retailers, Home Construction, and Home Improvement Retailers. Breakouts, whether a range break to recovery highs or (more importantly) a breakout to all-time highs after a proper sideways consolidation, can take many forms. We prefer when they occur on at least an uptick in volume, which generally demonstrates institutional accumulation. We also like to at least see a break above the prior high by 0.5% to 1% for the SPX — with immediate follow-through to the upside. The SPX has been drifting and building up renewed energy for almost three months and, bullishly, the 4Q EPS season looks s
