Will stock market bears avoid buying in May?

The stock market's volatility continued last week, with last Tuesday's daily Doge sell signal (see chart) sending daily momentum back to negative heading into Wednesday's open. This set the stage for Wednesday afternoon's FOMC announcement, with the S&P 500 quickly rising more than 70 points ahead of the press conference. The bullish stance did not last, and stock prices plummeted toward the close.

Wednesday's low close likely added to the market's weakness, as the major averages posted their biggest monthly declines of the year in April. The Dow Jones Industrial Average fell 5%, and the S&P 500 and Nasdaq Composite both fell more than 4%. Tuesday's consumer confidence index was weaker than expected at 97, compared with a median estimate of 103. Tuesday's sell-off was heavy as more than 80% of the Nasdaq 100 stocks fell.

Against this backdrop, the stock market ended the week with new buying, as advancing stocks outpaced declining ones on the NYSE by a 3-to-1 margin on both Thursday and Friday.Weaker-than-expected jobs report and Thursday's Apple earnings
apple
It helped foster a more positive outlook.

For the week, the Dow Jones Utilities Average led the pack with an impressive 3.4% gain, outpacing the iShares Russell 2000's 1.8% gain and the Dow Jones Transportation Average's 1.2% gain.

The Nasdaq 100 ($NDX) was able to rise 1%, slightly better than the 0.6% rise of the S&P 500, which currently leads the $NDX on a year-to-date basis. SPDR Gold shares fell 1.7% last week, but are up 11.4% year-to-date.

Last week, I said that stock market bears are likely to be disappointed with the market's move and that a positive close this week could cause many people expecting a deeper market decline to revise their outlook. I thought, “I should be convinced of that.''

Weekly charts of advance/decrease lines for S&P 500 and NYSE stocks only were featured last week (See chart) Previously, they were rising from the long-term EMA, which was a bullish sign. It is now further above the EMA and new highs will predict further new highs for the market average.

Since Spider Trust (SPY), the daily rise/fall line has been in a downtrend or correction mode.
Major shareholder yield index ETF

SPDR S&P 500 ETF Trust
) formed an important reversal on April 4th^th (see arrow). Last Friday, SPY rose further, closing just above its 50-day moving average and 20-day EMA at its monthly pivot of $506.74. R1 price in May is $519.62.

The S&P 500 A/D line has been in a downtrend, line b, since early April, but it broke out last week. The NYSE Stocks Only A/D line became even stronger with a downtrend, line c, and further above the previous peak. The NYSE All A/D line shows a similar movement above line d, which is in a downtrend. Having surpassed its previous peak, it is now in a short-term uptrend.

These downtrend breaks and positive formation from the weekly A/D line coincide with the end of the correction and the resumption of the uptrend from the October 2023 lows. This does not exclude the possibility of another sharp correction to the trend in another day or two as long as the daily A/D line remains above the recent low.

Following last week's discussion on growth and value, it was another positive week for growth with growth leading by almost 1%. The decline since early February has been led by highs, despite a temporary rebound in favor of growth. Another strong week in growth over value may be enough to signal a transition period where growth takes the lead again.

Invesco QQQ technical outlook
Invesco QQQ Trust
Confidence (QQQ) improved last week, but SPY remains strong. QQQ closed above the new monthly pivot at $428.40, but there is more significant resistance at $442.15. A weekly Starc+ band costs $462.53. His 20-week EMA is $424.37 and recent low is $413.07 (line b).

The daily Nasdaq 100 A/D line ended above the WMA and is positive (not shown), but the weekly is still barely below the WMA. Weekly Relative Performance (RS) rose last week, but will need to rise above WMA to show that QQQ is once again leading SPY.

A more positive reading from the daily A/D line is needed to indicate that the overall stock market is trending upward again as it was at the end of last year. According to the American Association of Individual Investors (AAII), the bullish percentage rose from 32.1% to 38.5% last week. This is consistent with my view that bullish sentiment may have fallen enough to signal the end of a correction. Therefore, stock market bears are likely to fight the trend.

Dynamic Trailing Stop (DTS) analysis is designed to help identify emerging market leaders early by examining multiple time frames. I'm reviewing this week's scans, and last week I saw a significant improvement in the NQs Largest Gauge.

Last week, Apple (AAPL) and Amazon also had new bullish WKs_DTS and 3_DTS signals.
Amazon
(AMZN). The overall reading for this group rose to 62.5% from 25% a week ago.

I'm also keeping an eye on the four-sector ETFs reviewed last week based on our annual pivot analysis for signs that the correction is complete. Mitigating the risk of new purchases requires more proactive action, so look at the risks rather than the rewards. Please be sure to use the bus stop.