Our post will be short this morning, with some quick thoughts on NDX, SPY, and IWM before the opening bell. Futures are modestly lower (-9pts) on what appears to be a rotation out of technology into industrials and healthcare stocks.
Summary
Sector Rotation
Sector strength is beginning to emerge in the industrial, financial, and energy stocks. Technology sector stocks are weakening a bit as most are at 52-week highs. That said, earnings have been better than most “experts” anticipated. It’s this unexpected strength that suggests stocks are in rotation mode, not selloff mode.
SPY Daily
The key to short-term sentiment is the 9/21d moving averages. SPY tested the 9ema on Thursday. This is a caution signal. A close below would be a reason for “us” to start hedging. Gold, silver, bonds, and puts would be our choice, with additional hedges in SPXU, SQQQ, and maybe SDOW.
Also, note the major VBP bars on the left side of the chart. That is support.
A close below the 21d would be a reason to get more aggressive short-term. August is one of the weakest months of the year, so this one could be another to add to the history books.
MACD would need to roll over and RSI would need to trend below 50 to confirm a short-term bearish bias.
Running behind schedule this morning with all the activity these past few days. We’re selling our house in New Jersey and moving to be near family “in-laws.” Have several offers above asking price so wish us luck.
Join us today in the trading room for our LIVESTREAM broadcast during market hours, as we navigate the current environment. Watch, listen, and trade from 9:20 AM to 4:15 PM Monday through Friday.
Happy Trading,
Vinny
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