All 3 major market cap indices have high Newton scores, a positive signal. However, if we dig a little deeper we notice that Small Caps have a slight edge as the rate of change is increasing compared to Large Caps. Overseas, we observe neutral readings with increasing momentum. Our models are still favoring equities over fixed income.

Among sectors, we are seeing Discretionary, Communications, and Energy on top. Health Care and Staples are at the bottom of the pile.

The inflation readings last week could help the market set a foundation as we head into Q2 earnings season on better hopes of a soft landing. Hundreds of companies will report over the next few weeks and S&P 500 firms are expected to post a drop of 9% in profits, the worst season since 2020. Overseas in Europe, the number stands at a slump of 12%. Still, investors will be looking to bid companies that can beat these lowered hurdles.

It is a quieter week on the economic data front with Retail Sales at the forefront tomorrow. This morning we received more evidence pointing to a slowdown in China as the world's second-largest economy grew less than expected. Many investors are wondering how much the slowdown will spill over to the United States and other major economies across the globe.