Today, a key shift that we’ve been seeing ever so slightly has become even more apparent. Recent IPOs, cloud stocks, cyber security names, and tech were taking it on the chin, and we saw a rise in transports, financials, energy and industrials. It’s rare to see the laggards trading higher with force, but that comes with sector rotation, and it’s critical to quantify. Let’s talk about the shift going on and where we will go from here.
With a breakdown of the broader average with the individual sector weightings, the S&P is climbing into an overbought zone.
With the market trends being the guide, I am still bearish many markets. The shorts through August got thrown for a loop because the market ratcheted higher to another resistance level. In this environment where “news” moves the market, and the market ignores data and macro, one of the best ways to control risk is to day-trade (which is the second premium video today).
The Russell and the transports may have looked strong today with their nice up moves; however, in reality they rallied directly into resistance, and they are the weakest links. Here is how I’m trading them. You can learn more during my webinar tomorrow, which you can sign up for right here: https://www.simplertrading.com/leverage/
The gap up this morning was promising for all of about 30 seconds, and the balloon just continued to deflate after that. We saw financials and energy trade higher, along with the Russell and transports, but I’m not buying this ‘bullish’ move. The market strikes me as weak, particularly with cloud stocks, cyber security, and several FANGs displaying their weakness. Let’s discuss….
It’s the setup we’ve been waiting for, and here’s what else I am watching for trades after Monday’s session.
How much more hopium is out there for the market? In this video I look at the markets that are rallying despite the bearish bias and chop in the broader averages.
