Monday Sector Strength
Disclaimer: All charts and comments are intended for education and discussion purposes only. No investment recommendations are being offered. Please do your own research and take responsibility for all investment decisions that you make. Questions and comments related to this post are encouraged. | MON - Sector Strength | TUE - Interest Rates | WED - Market Breadth | THU - Commodities & Currencies | FRI - Market Sentiment | SAT - Bullish Percents | About | contact: HeadlineCharts@gmail.com |
October is the one-year anniversary of HeadlineCharts. Seems like a good time to ask the regular readers of this blog to send an email to the address above to acknowledge what they like and don't like in the blog. What makes you read it regularly, and what would you like to see that is isn't here, or needs to be improved?
Above is the spreadsheet I keep to track the major indexes in order to quickly see which areas are outperforming, and if there are any laggards diverging from the group. Last week, this snapshot of the market showed every index above the 40-week... things are different now. At worst, the market is back in an intermediate downtrend after only two months or so of gains. At best this is a serious challenge to the intermediate trend, and calls for a high degree of caution. I prefer the second which calls for caution instead of serious selling or shorting. Of course, the market on Monday will indicate a lot, and if it gets bad, I will raise some cash.
The indexes most likely to show weakness were the weakest. There really aren't any surprises. Small and mid caps, Japan, real estate, financials and discretionary stocks are all correcting again and below the 40-week average, and these were all the weakest areas of the market back in July and August.
Above is a look at a daily chart of the intermarket. Bond prices are rising in a flight to safety and the expectation of weak US economic growth. Commodities are rising in response to global emerging markets demand, and a falling US Dollar. And US equities failed at resistance after briefly hitting highs above the prior pivot peak in July.
Of course, what we really care about are equities, and figuring out whether this dip is a buying opportunity or the signal to get out to preserve capital and profits. We'll need more information to make that call. Based on the chart above, one sign that this is buying opportunity will be if bonds slow the advance higher and fail at the prior high near 115. For US equities, it's if the SPX can hold above the 200-day, which is the line in the sand. A break below the 200-day, and its time to stop out and be in cash.
