Over the past couple of weeks, TICK has signaled potential rotation between stocks and sectors. In addition, new highs have remained above the zero, as new lows are fewer in number. Most of the rotation out of healthcare was very obvious last week, as device makers, healthcare providers and biotech slid after Bernie Sanders comments hit the wires. This week buyers continue looking for bargains in these groups.
Summary
New Highs and New Lows
As new highs outperform, histogram remains above zero. The moving average continues a bullish cycle pointing out a stark difference between the indices this Spring, versus Fall/Winter 2018.
We had a nice spike yesterday as breadth continues to effect more stocks.
Consider the above graphic for a moment.
Many traders are thinking that the S&P 500 is printing a double top, showing potential for a pullback. Junk and High Yield Corporate Debt, in addition to NYAD in the lower panels above, both of which signal strength.
Small caps (IWM) and biotechs were weakening; this week buyers are piling back into beaten-down stocks in this group. Therefore, we cautious until a double top is no longer a concern.
Sector Rotation and Stocks
Considering the above brief analysis, there is another possibility we need to consider. Rotation is apparent. We’ll focus on these sectors.
Industrials, transports, communications and media, financials, technology and consumer discretionary are trending, showing signs of strength. Continue trading these sectors, and trail your stops.
Healthcare, biotech, utilities, and real estate were weak. Now we see buyers jumping back in as they hunt for bargains. if you’re looking for new positions I’d focus here today.
Also consider international stocks, as many show signs of continuation while institutions look overseas for inspiration. Global growth has bottomed, rendering a nice proposition for investors seeking alpha.
Boeing is higher this morning. Caterpillar is lower in early trading.
Join us today in the trading room for our LIVESTREAM broadcast during market hours, as we trade new positions in strong sectors. Watch, listen and trade from 9:20 AM to 4:15 PM Monday through Friday.
Happy Trading,
Vinny
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Futures are mildly green, after weak manufacturing data out of Europe.
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