The S&P 500 SPY ETF, FANG Stocks, and SPDR Sectors are all dictating bullish positioning short-term. All three of these yard markers are supporting the markets at all-time highs. In addition, China’s move to halve tariffs on $75 billion of U.S. imports improved investor sentiment. The markets are on auto-pilot.
The FANG Stocks
All of the major players in this group are above VWAP to start the day. While this isn’t a signal in itself, we do use these as a barometer for the day. All six of these stocks above VWAP gives us a more aggressive stance. NFLX dipped slightly as we were writing this post.
China news suggests Beijing is backed into a corner. Apple, in particular, should perform best with this backdrop, while some suggest supply chain concerns are warranted. Despite this concern, investors are still buying shares. NVDA, FB, and GOOGL are just below recent highs.
Watch these stocks this morning for strength.
SPY and Futures
Futures are higher again this morning, and SPY is at all-time highs. A double top was a possibility before the close. Instead, this 332.95 becomes support as the index ETF trades at 324.33 this morning.
The take away remains the same; if price action is above the 9ema and 21d moving averages, we are bullish. The only thing left is what sectors should be in focus over the next few days.
SPY and SPDR Sector Rotation
We watched Wednesday as sector rotation became more obvious. Investors and fund managers , moved back into industrials, financials, and materials this week as volume rose markedly. Focus on these sectors.
- Financial Services (XLF) weighs in at 15.94%, at a 52-week high.
- Consumer (XLY) 9.77% broke out this week, a new 52-week high.
- Technology (XLK) 24.44% weighting, broke out, a new 52-week high.
- Healthcare (XLV) is back to 52-week highs, adding 13.96%.
- These industries represent nearly 65% of the SPY / S&P 500.
Materials (XLB) 2.55% and real estate (XLRE/IYR) 2.95% are breaking out of a downtrend. Industrials (XLI) 9.02% moved back above its 21d moving average, driving a bullish reversal back to 52-week highs.
The only laggards are energy (3.84%) and transports, a sub-sector of the indutrials industry group.
Considering the above, we are becoming more aggressive in our process. We’ll watch for opportunities to swing positions as the markets trade in uncharted territory. International ETFs are improving as well.
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Happy Trading,
Vinny
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