The S&P 500 Was Up, But Did You Get a Look at This Slower Moving Asset Class?
Money may not be flowing into the mega-cap names anymore, but this other asset class is showing signs of life.
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The Market
As we see the money come out of the mega cap names it seems to find a home elsewhere. The either/or market. So when I saw that the Russell was up so much again today I was quite excited to see the action in individual stocks. I was disappointed.
There seemed to be a lot of ‘up a penny or two’ not anything you can grasp on to. Yet I do think if money is not flowing into those mega cap names it ought to find a home elsewhere.
For me the big news today was the move in bonds. It has been one of the longest waits for that head and shoulders bottom to play out. Of course now everyone has noticed the bonds, where they ignored them for the last month (yes TLT bottomed almost a month ago). Now we see TLT knocking on the door of this downtrend line.
My view is that I think rates can back off more (TLT can go higher) but I still think taking something off the table here is smart. First there is resistance and second, there is an Employment report on Friday so booking a few profits here and letting the rest ride seems prudent.
One of the things I am watching closely is the Utes. They have held up relatively well but they were up but sloppy today. More than that, XLU isn’t over 80 yet. In my view the Utes have been a good leader to the bonds so I want to see XLU get itself over 80 and I don’t want to see a break of that uptrend line.
Down below you will see the Volume Indicator has reached 54%. I have been noting that by midweek this week I expected these intermediate term indicators to get to an overbought condition and this one is just about there. The mid 50s gets this overbought.
Finally don’t take your eyes off those lows on the SOX. I still think that is a very important line, as is Microsoft’s.
New Ideas
I recommended XME as we entered the new year. So far it has actually mapped out as I envisioned but now if it can’t get up and over 62 I am going to give up on it because that probably means there is more back and forth work to be done.
As a follow up, someone had asked about Pepsi PEP in December and I noted there was an unfulfilled target on the downside of 143. It bounced off 142 and has now, on crummy earnings, revisited that level. I see no bottom but if you want to take a stab with a stop under those twin lows, this is your chance.
Today’s Indicator
The Volume Indicator is discussed above.
Q&A/Reader’s Feedback
You know I can only marvel at the chart of British American Tobacco BTI but can I also come up with a measured target? I sure can: 41-42. The one thing you don’t want to see happen is a gap down leaving that up there as an island.
After about five months of sideways Abercrombie and Fitch ANF finally broke out—to the downside. Please note this is what the SOX chart looks like (pre break) which is why a break is important to pay attention to. ANF measures to the 95-100 area. It probably bounces before then, especially since there is support around 110 but I would not bottom fish.
I honestly did not even know Groupon GRPN was still around but lo and behold, it is and it has been going sideways for a year now. Earnings are still a month away so maybe it can breakout of that head and shoulders bottom (over13) before then. Do notice that it appears the last quarter’s earnings weren’t so great so I probably wouldn’t want to be around for earnings.
In early January I warmed up to Ford F again, thinking it needed to get up and over 10. It’s been a struggle but I remain optimistic as long as it doesn’t break under 9.50.
