Rotation Remains Alive and Well
Was it just two days ago everyone loved tech and semis? Was it just two days ago I was asked what could make the market go down? I mean, the argument went something like this: it’s a midterm year, and stocks always go up, or doesn’t the market (meaning the QQQs and the S&P) act so well?
And here we are with something that I don’t think was on many radar screens: tech stocks with earnings folks didn’t like. Oh, it’s not all of them, but Meta, Google, and Amazon qualify as tech stocks, don’t they?
As someone who would prefer folks get more cautious and less complacent on the market, I take this ‘news’ as a step toward that. Yet for the QQQs to break 700, that is a long way away. Consider that Thursday’s decline only took the QQQs down ten points (and they closed at 715, so we’d be talking about a whack of more than 15 points, which is an awful lot).
But you know what? Now all those tech fans from a few days ago tell us the market is broadening out. Now they all love the others. Oh, I don’t think it is quite the same as it was in early August, but it could get there!
I have been a fan of the ‘others’ using $RSP since I returned from my vacation in early October. This week I decided $IWM had finally gotten interesting too, as I looked for it to cross that downtrend line. Now it has.
IWM has some resistance in this area. It could use a rest and/or a pullback. I am not giving up on it; just with it having been green for eight of the last nine trading days, it is a bit overbought and could use some pulling back and/or digestion.
There was one interesting statistic in Thursday’s trading, and that had to do with Nasdaq’s volume. Earlier this week when Nasdaq rallied hard (+214 points) I noted that upside volume was a mere 52% of the total. I thought that was pretty paltry. It represented the Either/Or Market.
On Thursday, upside volume was 51% (barely). For a day Nasdaq got clocked for 365 points, that is impressive. I mean, it shows the group rotation is alive and well because as money leaves the big cap tech names/semis it seems to find its way into the others, but for Nasdaq’s upside volume to be even to slightly up on such a big down day is of note.
Finally, as you can see, Nasdaq’s Overbought/Oversold Oscillator has pushed up over the zero line, so it has used up the short-term oversold reading. It’s possible it pushes upward one more time (the math) upward, but I will be focused on sentiment. I would finish by noting the NAAIM folks pulled in their horns this week and have their exposure back at 76.
