It was a tough week, but the market did show signs of spunk here and there, but gave in to the gravitational pull of a new Fed and new Covid-19 variant. But is either one so “new” investors need to panic? I just think investors are caught in a maze of overthinking, which is not a good combination with an expensive stock market.
Market breadth for the week was a disaster – especially for the NASDAQ Composite, which slipped below its 50-day moving average, and must hit the brakes soon or could fill that gap at 14,600 (see chart).
Market Breadth | NYSE | NASDAQ |
Advancers | 1,070 | 1,104 |
Decliners | 2,482 | 3,944 |
52-Week Highs | 104 | 199 |
52-Week Lows | 488 | 1,182 |
Up Volume | 9.1 billion | 11.2 billion |
Down Volume | 17.5 billion | 17.5 billion |
To see the chart, click here.
The S&P 500
The good news is investors were still trying to stay in the market – rotating into traditional safe havens, including Staples, Health Care, and Utilities.
S&P 500 Index | -0.84% | |
Communication Services XLC | -0.23% | |
Consumer Discretionary XLY | -1.94% | |
Consumer Staples XLP | +1.24% | |
Energy XLE | -0.79% | |
Financials XLF | -1.63% | |
Health Care XLV | +0.18% | |
Industrials XLI | -0.12% | |
Materials XLB | -0.22% | |
Real Estate XLRE | -0.50% | |
Technology XLK | -1.67% | |
Utilities XLU | +1.00% |
Growth took a hit on Friday, but the real carnage came in those Wall Street favorites, Financials and Industrials. I still think the big five, which are 70% of the total S&P 500 gains this year, will remain solid and the place to hide out for the rest of the year.
Right Where We Want To Be?
Last week stuck to the seasonal script with that strong dip, which could continue for another week before a strong year-end rally could begin.
We’ll see – for now, this market is oversold, so we are looking for opportunities, but need to see upside tests achieved before forcing the issue.
To see the chart, click here.
Portfolio Approach
There are no changes this morning to our Hotline Model Portfolio.
The NASDAQ Composite looks vulnerable again this morning. Last week saw 1,182 new 52-week lows for the week versus a total of 1,104 advancers. That’s a serious correction and probably overdone, but that’s not the same as being done.
Under 200-day
It is remarkable how many stocks on the NASDAQ and Russell 2000 are now changing hands below the 200-day moving average.
For the entire market, the number of names under 200-day is worrisome but points to oversold conditions.