Raymond James sees mixed momentum signals in equity markets

Investing.com -- Major North American equity indices show mixed short-term price momentum, with the S&P 500, TSX Composite, and Nasdaq 100 displaying signs of strengthening while the Russell 2000 stalls, according to Raymond James.

The S&P 500, TSX Composite, Nasdaq 100, and Russell 2000 have reclaimed their 50-day and 200-day moving averages. Multi-day closes above these levels confirm short and intermediate-term price trends are upward.

Raymond James notes that as the conflict in West Asia appears to be drawing to a close, equity markets have repaired technical damage from March by reclaiming their 50-day and 200-day moving averages. Sector rotation back toward Information Technology, Industrials, and Basic Materials suggests Phase 2 of the Market Cycle Model remains intact.

The firm views near-term weakness as an opportunity to add cyclical exposure for an intermediate-term rally phase that could extend into July.

Information Technology, Materials, and Industrials rank among the top four performing sectors year-to-date. However, Raymond James warns that failure to remain above respective 200-day moving averages, combined with outperformance by Energy, Basic Materials, and Consumer Staples, could signal a shift into Phase 3 of the Market Cycle Model.

A multi-week move below the 4-year moving average by most North American equity indices would be consistent with a secular bear market, according to the firm.

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