Sector and bond performance in the short term has caught our attention, as various asset classes begin to show signs of strength. Select industry groups and sectors are cycling near lows. Bonds are showing signs of bottoming at current support.
Bond Performance – “The Cycle”
Bonds have been shunned for the past two weeks, stopping Monday just below the 20day moving average. TLT produced a hammer on Wednesday, with subsequent price action remaining above the 50day. It was this price action that prompted us to start a position on Friday.
The cycle is near complete. If bonds begin the turn soon, traders will begin to chase price action back to recent highs. We will add if price action continues higher over the next few days.
Technology Weakness?
Telecom Equipment and Services
Building and Construction
The rebuilding effort required after this hurricane season has yet to be fully realized. Companies like Home Depot (HD) and Lowes (LOW) will benefit this quarter from construction spending.
Home Depot rose to 52-week highs again yesterday. Lowe’s complimented HD’s price action late in the day, with its own show of strength. We’ll monitor this activity over the next few days. HD is trading at 161.50 in the pre-market session.
The pre-market action suggests we might see a bounce today. The watch list is actionable, as well as previous stocks we have traded, so join us LIVE if you have the time today. I’m thinking “Turn-around Tuesday.”
Happy Trading,
Vinny
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