Risk asset markets in the U.S. are in confirmed uptrends for the most part. There is broad participation. Anyone making the “Mag 7” argument is either lying or completely detached from reality. Intermarket themes are beginning to confirm as well.
The title of this week’s note is a reference to something that we have been discussing internally for months. I hesitate to put it into print, but since we believe in probability over prediction—and therefore are not superstitious—I am going to go for it: Melt Up!*
S&P 500
That is a weekly closing high for the S&P 500. The index is in a confirmed uptrend above a steadily rising 60-week moving average.
Source: Optuma
S&P 500 Sector Returns
Participation in the uptrend is broad. On the six- and twelve-month timeframes, all 11 sector ETFs are positive. The list below is sorted by twelve-month performance. Note that Technology is not at the front of the pack. Neither is Discretionary.
Source: Optuma
Dow Jones Transportation Average
After three years in a sloppy consolidation, the Dow Jones Transportation Average has broken to new highs above a now-rising 27-week moving average. For those of a certain vintage, you may recognize this as a take on Dow Theory, and it points to confirmation.
Source: Optuma
High Yield Bonds
The SPDR Bloomberg HY Bond Fund (JNK) closed the week at record levels on a total return basis, well above the rising 200-day moving average.
Source: Optuma
*Full credit to Manish Khatta for being the first on the team to call “melt up” in our internal conversations.
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