Today’s action had Advancers leading Decliners 1.7 to 1 which is good breath BUT a closer examination reveals the Sectors that were leading the move were Defensive and Inflationary in tone.
XLE +2.3% Energy
XOP +1.7% Oil Exploration
XLV +0.7% (Healthcare)
XLP +1.4% (Staples)…..+7.5% gain in past 5 days
XLK -1.2% Technology
IGV -2.2% Software
SMH -0.8% Semis
HACK -0.6% Cybersecurity
By just our “observations”, we can recognize the market environment has rotated to very different groups and away from technology growth stocks currently. We started moving away from Tech names from the Focus List in mid-Dec based on our observations.
QQQs tested the lower trendline today and some support came in for today.
“Uncertainty” has definitely increased with Daily Headlines putting our heads on a swivel….all creating more volatility and making it hard to trade a trend. There is nothing wrong with staying close to shore with exposure levels on the lower side.
HCC was strong early but faded as it has become extended
GOOGL tested the Flat Base Breakout level and got support
GE was disappointing closing down -2.6%. Earnings 1/22
AVGO gave back three days of gains and was rejected into the 50d
RKT has been holding up well so far after a strong move up in past 2 weeks
It is a very difficult market environment for our style of investing which is trend-following in growth stocks. There is no need to press on trades when the odds are not in your favor.
J