Side Note: For the record, I continue to agree more with Warren Buffett’s thoughts on technical analysis, “I realized that technical analysis didn’t work when I turned the chart upside down and didn’t get a different answer.” However, I will continue to post analysis, at least through this financial quarter ending in June.
The S&P 500 ($INX) remains in a major (long-term) downtrend, despite the higher monthly settlement at the end of May. The key level remains the all-time high of 6,147.43 posted durning February. Theoretical Positions: Long-term investors may have followed Warren Buffett’s lead and moved to cash given all the uncertainty in the S&P 500.
The Dow Jones Industrial Average ($DOWI) also remains in a major downtrend, technically, also despite a higher monthly settlement at the end of May. The key level is the all-time high of 45,073.63 from December 2024. Theoretical Positions: Long-term investors likely sold or protected their position as the DJIA confirmed a major downtrend the past number of months.
The Nasdaq ($NASX) is a toss-up. The Index completed a bullish spike reversal at the end of April before extending its rally through May. Theoretical Positions: Long-term investors might’ve bought back into high-tech stocks late in April as the Index made its impressive run. Others likely stayed on the sidelines, or moved more of their portfolio to cash.
The US 10-year T-note (ZN) is not as clear a read as it has been since the completion of the bullish 2-month reversal during October and November of 2023. I’m going to call the major trend sideways, for now. If the US Fed is forced to raise interest rates to fight inflation tied to trade wars and tariffs, longer-term US Treasury instruments could come under increased pressure. Theoretical Positions: New longs might’ve been established near the November 2023 close of 109-150. Additional positions could’ve been established near the April 2024 close of 107-140. Another round of long positions could’ve been put in place during August 2024 as the ZN took out its Wave 1 high. Additional longs could be established near the November close, raising the overall position average to roughly 110-250. Investors could’ve added long positions on a move beyond the previous 4-month high of 111-155 (December) during March. Sell stops would be below the January low of 107-060.
