Rich Ross

About the Author Rich Ross

Ross is a Managing Director and Head of Technical Analysis at Evercore ISI. Mr. Ross is responsible for analyzing price and intermarket relationships across stocks, commodities, currencies and interest rates around the world. Prior to joining Evercore ISI, Mr. Ross spent 5.5 years at Auerbach Grayson where he built the technical analysis product from the ground up. Prior to that he wrote technical research for Tocqueville Securities and held positions as a NASDAQ Market Maker and Proprietary Equity Trader.

SPDR S&P 500 ETF Trust (SPY): Don’t Call it a Pullback

It is Bullish that the S&P 500 (+130 bps) and NDX 100 (+411bps) are ostensibly at all-time highs even as the macro trinity (Yields, Dollar and Crude) of the reflationary resurgence has declined in 2017.

Importantly, my cross asset work suggests that those countertrend macro pullbacks have run their course; the “reflationary rally remains in a strong position”; and the coincident declines in Energy (Crude), Financials (Yields), Small Caps (Dollar) and Transports; all offer compelling tactical entry points to deploy risk capital.

Moreover, it is Bullish that the biggest sector (Technology) is leading the market higher, and that Consumer Discretionary is the best performing sector (Cap Weighted +332 bps) even as department stores hold “liquidation sales.”

Broadly speaking it is Bullish that 8 of the 10 S&P sectors remain higher ytd as macro cross currents swirl and the inauguration looms large. It is concerning, not alarming, that Fins and Energy have failed to rally with the same (or any) authority displayed by Yields and Crude, but I expect the macro to impose its will across stocks in short order and would use this divergence as a buying opportunity.

In sum, I reiterate my key calls (Higher Yields, Stronger Dollar, Higher Crude, Weaker Yen, Weaker Gold, Buy US, Europe, Japan, Brazil, Russia) and my “base case for a bull market” analogous to 2013. Finally, as it pertains to the market post inauguration; we must consider that the reaction (of risk assets) to the election itself of the very same candidate being inaugurated was historically positive.




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