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Gerald Appel's Systems and Forecasts Market Update

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This article is published in collaboration with Scutify, where you can find real-time markets and stock commentary from Robert Marcin, Cody Willard and others. Download the Scutify iOS App, the Scutify Android App or visit Scutify.com.

U.S. stocks hold onto last week's big gains.

Stocks around the world rallied last week. U.S. stocks mostly held their ground today, but European stocks $IEV gave back more than ½%.
Our models remain overall neutral-positive and will likely remain so for the rest of the month, barring a significant market breakdown that I do not expect. Nonetheless, stocks are at a crucial juncture that may determine whether the market will surge to new highs or whether the sideways trading range will persist.

On the near-term bullish side, SPY has generated a fresh MACD buy (circled in green in the chart below). Relative strength between the Nasdaq and S&P 500 also favors stocks in the near term.

On the side of caution, the S&P 500 SPDR $SPY faces resistance around $210. The gradual downtrend resistance has not been broken in more than a year. (See chart below.) It is also concerning that defensive and lower-volatility ETFs (XLP, SPLV, XLU, DIV, IYZ) have outperformed the S&P 500 so far this year. (Healthcare is a notable exception.)

My own projection is that the trading range will continue, but as always the level of market exposure will be guided by our models rather than by my subjective expectations.

This commentary is an excerpt from today's Systems and Forecasts investment letter. Click here for more information.


This article was written by Marvin Appel for Systems & Forecasts on May 31, 2016.

This article published in collaboration with Scutify, the best app for traders and investors. Download the Scutify iOS App, the Scutify Android App or visit Scutify.com.

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