May 26, 2025

​US SECTORS

The recovery in equities remains intact despite short-term weakness. The VIX index maintained a series of higher lows since July of 2024, although resistance at 24.50 could keep equity buyers active on pullbacks. The S&P 500 and Nasdaq 100 will need to hold above their 200-day moving averages to maintain bullish momentum. We expect a wide trading range, with upside confined to all-time price highs. Seasonal tendencies are positive until July, which could maintain support above 5,300 in the S&P 500.

Within US equities, we prefer long consumer discretionary on an absolute and relative basis. We prefer opportunities within the retail industry given improving momentum signals after a period of extreme underperformance. Healthcare is also attractive given deeply oversold conditions, only on a relative basis. Real estate and homebuilders have new short signals.
​Real Estate
  • Sector is below 200-day moving average; break below 40 to confirm short
  • Relative Z-score is not yet oversold (at least -2 st.dev from 200-day MA)
  • PLD/SPY; PSA/SPY; CBRE/SPY: relative downtrends
Consumer Discretionary
  • Sector is holding above its 208 breakout level with improving relative strength.
  • HAS: Above 200-day moving average; target 85 and 200-week relative (HAS/SPY) moving average.
  • LULU: Pending buy above relative (LULU/SPY) 200-day moving average.
Healthcare:
  • New oversold signal based on its relative Z-score. On an absolute basis, a long requires two consecutive weekly closes above 140.67 in XLV to remove bearish bias.
  • LLY/SPY: Sell relative to S&P 500; ratio crossed below its 20-week moving average.
  • BSX/SPY: Fresh relative sell signals after the ratio deviated far above its 20-week moving average. 
  • CVS: Fading momentum after holding resistance at 72.41; support at 200-day MA. Relative breakdowns in effect. 
Contrarian Take: Historically, the sector becomes attractive relative to the S&P 500 when its price ratio has declined roughly -2 standard deviations below its 200-day moving average. 
MACRO 
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  • Cocoa: Declined from resistance at 11,547, target support at 200-day MA
  • DXY: Bottom of range-- confirm break below 100 to consider short dollar positions. 
  • NZD/USD: Support intact from 0.588; reached initial target top-of-range 0.60; monitor pull-backs
  • Platinum and Palladium: pending short-term breakouts; long-term base support -- monitor pull-backs

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