If You're Into Group Rotation, This is the Market For You
Another day where the big indexes tread water, despite big moves beneath the surface.
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The Market
So, we had another day where folks decided to buy the down-and-outs. I never mind when that happens. I like it; I embrace it. Yet I must say it never seems to last.
Just look at the ratio of RSP (equal weight) SPY relative to the S&P. That was an awesome move today, but it’s still a big downtrend, isn’t it? We had a day like this in late June, and then we went right back to the downtrend. Maybe this time will be different.
Sticking with ratios, the SOX to Nasdaq, which we looked at a few days ago, is rolling over after having stalled out in late June. And as I pointed out, it never even made it to the high of last year. Now, after hours, we have Texas Instruments plopping.
Texas Instruments joins JP Morgan, which also could not get going after their earnings. It joins Netflix, which could not get going after their earnings either.
I know folks will glom onto the semiconductor story, but I think the story of the day was the new high in the Utes and the mini breakout in the iShares U.S. Real Estate ETF IYR. We looked at both last weekend. At the time, I noted everyone is already talking about the homies (which I have said were positive charts), but no one was talking about the REITs. They are still not.
There is some resistance at 98-99, but that is a nice move up and out of a two-plus-month consolidation.
I wish I could tell you that today changed the indicators, but it did not. The group rotation trade is alive and well.
New Ideas
The US Dollar got a lot of love late last week and has pulled back. It had better hold this level because if it can’t, I will have to give up on it.
Today’s Indicator
The McClellan Summation Index is still heading down, even with the good breadth in the market today. Another day of good breadth would get it to stop pointing down.
Q&A/Reader’s Feedback
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Palantir PLTR hasn’t done anything wrong, but it hasn’t made much progress since late June either. It’s got decent support in the 130-135 area. Under that uptrend line and the stock will start to look questionable. There is an unfulfilled (longer-term) target in the 175 area.
RH RH has been trying to build a base since March’s gap down. It’s pretty small for the time being, but the stock could get to that 225-250 area. I suppose a gap up over 250 would change the chart, but for now, that’s what I would look for.
I don’t have a new target for Amgen AMGN. This area was my original first target area. Even if it crosses this lower line, it still has to eat through resistance, but as long as it stays over 290, I still think the chart is worth sticking with. It is up 10% from when I recommended it, so if you wanted to take something off, I wouldn’t argue, but it has made higher highs and higher lows.
