S&P 500 Momentum Report
S&P 500 reclaimed above critical level on easing tapering concerns.
With an initial selloff last week, all three major US indices are seeing regained strength to start the week. Ahead, one may look out for the Federal Open Market Committee (FOMC) minutes this Wednesday. Comments from Fed officials yesterday point to a continued dovish tone, potentially in line with the accommodative stance we may get from the minutes release tomorrow. That said, investors will be on the lookout for assurance from policymakers’ inflation outlook.
The S&P 500 was able to rebound off its 50-day moving average (MA) last week, gaining ground above a key critical level at 4,130. This level relates to the Fibonacci 161.8% extension level, which saw prices being supported on two previous occasions.
Sector performance
From sector performance, one may continue to find strength in cyclicals and re-opening sectors in the likes of energy, materials and financials on both a one-week and one-month basis. The technology sector managed to display signs of strength, paring back some losses towards the end of the week to deliver overall weekly return of -0.4%. The 10-year Treasury yield attempted to stay above the 1.70% level on higher-than-expected inflation figures but the upside did not last long, providing a boost to growth stocks. This is further reinforced by weaker-than-expected retail sales which reinforces the narrative for the Fed to remain accommodative in the near term.
Momentum stock studies
Note: We have selected various inputs to screen for stocks with the strongest positive momentum. The logic behind the screener is that if any stock passes all these momentum screens, there is a higher probability that they will continue on the current trajectory in the short-term. The idea of buying high and selling higher is key here.
Screening for the strongest stocks in the S&P 500 will require a stock price to: 1) be above the 20-day moving average; 2) be above the 50-day moving average; 3) be above the 100-day moving average; 4) price has closed above the upper Bollinger band.
T-Mobile (TMUS) rebounds off resistance-turned-support level
T-Mobile is widely seen as a beneficiary of growing 5G adoption by providing wireless communications services and equipment sales from vendors such as Apple, Samsung and Google. Refinitiv estimates show 26 ‘buy’, three ‘hold’ and no ‘sell’ ratings, with a target price of US$163.36. Its share price has previously broken out of its key resistance level at 135.50 to reach its all-time high. A retest of that resistance-turned-support level on price retracement validates the upward momentum, with a bullish crossover of the 50-day and 100-day MA. One to watch.
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