S&P 500 pushing into the Bull Market Region

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Major indices advanced on Thursday as technology and consumer staples pushed major stocks higher. While the week has not ended, there is growing momentum for S&P 500 to reach its four-week winning drive.

As S&P 500 moved to the 4294 level, it could be seen as a new bull narrative which is a 20% jump from its prior low region. Technically, it had remained in the bear camp for about 248 trading days, which is seen as the longest since 1948.

Oil prices face weakness from weak global demand.

As the commodity price drops largely attributed to the poor demand from China, the recent output cut by OPEC could not reverse the pressure. The latest data shows West Texas Immediate Crude for the July delivery segment down by around 4% to hit $69.8 per barrel.

The capital market is likely to price in further on the expectation of another slowdown in the global economy, and that can add pressure on oil prices further. With the latest development in Iran that could potentially be allowed to ship out more barrels of oil each day, the additional supply will dampen oil prices further.

Russell 2000- A laggard in the spotlight

While Russell 2000 fell on Thursday, its ascend recently had watched the attention of investors. Small caps recovered from lost grounds in June after a terrible May focused largely on big tech firms.

The return of favour to Russell 2000 reflects investors becoming more confident in the macroeconomic outlook. Whether the sentiment can be further lifted depends on major inflation, CPI data, and FOMC meeting outcomes.

We continue to hold small caps although mindful that most bull cycles are accompanied by a rise in small caps in the early period but are not yet seen at the current stage.

What’s on the menu today?

There isn’t any major data for the day. The market will likely remain cautious ahead of next week’s FOMC and CPI (yeah, we have been mentioning this often). If there is tapering in major indices and profit-taking, it should not surprise.

It is 9 June, 9 am in Singapore and 9 pm in New York. Finally, it is the last trading day of the week. We hope all friends having a blissful day at work today.