The SPY continues higher, as TICK cumulative shows institutional sentiment in a persistent state of rotation. There is no pullback for fund managers to buy, just rotation within individual sectors.
Technology, some energy, industrial and consumer discretionary stocks are receiving most of the capital flows. Consumer staples stocks are being sold at the present time. It’s the latter two sectors that form the XLP:XLY ratio; this indicator is also bullish.
SPY is Consolidating Recent Gains
The bullish reversal that started in late August, pushed convincingly through the 250.50 (+/-) zone on a breakout, that has seent the markets trend higher for 7 weeks. This week started with what appeared to be a much-needed respite, however, several high profile stocks are reporting earnings this week, which could extend the current overheated trajectory for a few more days.
TICK cumulative in the lower panel can only rise when more stocks are being bought on an uptick, than being sold on a downtick. Until that measure of institutional sentiment crosses lower, the trend is up. That isn’t an opinion, it’s an observation.
Junk Bonds Are Teetering?
As long as junk bonds dance around the 20ma, there is no signal. A move higher would reinforce the bullish trend, while a move lower would add one for caveat for equity bulls in the short term.
FB AAPL BABA
These three stocks will get a lot of attention this week, as speculation abounds. Will Apple 8 or X save the day? Is AAPL a tech stock or a consumer electronics stock? Will they beat having missed for the first time last year? The markets don’t care about opinions, Apple broke out to 52-week highs on Monday.
And BABA? It’s bouncing off VBP support. You can also trade AABA which mirrors BABA price action; both are trading higher in the pre-market session.
Volume is spiking and MACD turned abruptly on Monday. RSI suggests higher prices are in store for this Chinese consumer discretionary kingpin.
Sentiment and Week 8
The point is, all of this speculation gives you no actionable information. Sure breadth could be better. But, trading price action, and not opinions is the surest way to win in this ever-changing market.
BABA will likely trade through recent pivot highs today. Use your Trade of the Day setup (ToD) for the best risk-reward entry.
By the way, INTC, AMZN, MSFT, and GOOGL are trading exceptionally well post-earnings. And, so are a lot of other tech and media stocks like AMAT, NVDA, and NFLX. TSLA could be a sleeper.
See you then,
Vinny
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