Stock Market Is Bouncing

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Magnificent 7 Aggregate

• The daily chart below corresponds to the aggregate of seven Magnificent 7 stocks.

• The daily cycle composite comprises Nominal 20W and 40W cycles, and 1.9-year cycle.

• There is a clear cycle trough in the last week of March, like the cycle trough of SPX and NDX.

• Of course, the component stocks may have different cycle composites.

• We will continue to examine the individual components next week.

Sentiment & Technical Analysis

• The CNN’s Fear & Greed Index is back in the Fear territory after one bad market day but does not scream extreme fear yet. 

• A couple of more down days can escalate it to an extreme. After a weak Friday, the market usually bottoms on Tuesday. The key word is “usually;” this is not a prediction.

• Several days ago, I posted a chart like the one below showing a negative divergence between the McClellan Volume Summation Index and NYSE 52-week Highs-Lows, noting that that could be an early sign of pending stock market reversal.

• Eventually, the NYSE 52-week Highs-Lows also rolled over, followed by the S&P 500, though there is still no confirmation of a downtrend.

• Notably, the negative divergence between these indicators, and relative to the S&P 500 anticipated the SPX reversal, just as it did in December and January.

• It's worth adding these indicators to your arsenal of technical indicators. They are components of the CNN’s Fear & Greed Index.

BraVoCycles on X

• Consider following me on X (former Twitter) in addition to the newsletter, as I often post valuable information there in real time between the newsletters.

  • On Saturday, I posted charts of the Nasdaq and S&P 500 divided by Money Supply (M2), which shows that these ratios closely approached their values during the internet bubble.

  • The peaks are associated with the titles of The Wall Street articles, which refer to the online revolution then and AI now.

  • Just as the internet revolution changed how we live and do business, so will AI.

  • However, that does not mean the AI stocks will go “to the Moon.” They will likely experience a correction/revaluation; some companies will fail while others will prosper.

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