Week 20 Trending Tuesdays

Summary

Most markets and sectors weakened while Tech keeps doing well. The S&P 500 remains short-term bearish although it still also looks undecided. The next move could go either way although most of its sectors (7 out of 11) are trending bearish.

The immediate concern seems to be the debt ceiling and how much we get to the brink on that. A resolution to that should give a pop to the market (at least short-term before other realities set in). But the resolution could go down to the wire which would mean increase in volatility (translate weakness in markets).

Major Markets Trending

There are 2 changes in the 2 days of trading this week so far. The S&P 500 price dipped below its 10-day moving average as it stays short-term bearish. The Dow Jones price dipped below its 50-day moving average as it also remains short-term bearish. The Russell 2000 remains perfectly bearish, while the NASDAQ and NASDAQ 100 remain perfectly bullish.

I remain short the SPY and IWM.

We continue to see the divergence in the market between the tech (mostly big tech) and the rest of the market. Nothing wrong with that except who will big tech sell to and generate growth from if the consumers (as we are seeing) and the other businesses (Home Depot results) keep slowing down?

If there is earnings compression for other companies, then eventually that will catch up with the tech sector as well. And we need to remember, no matter what the Fed says, they are absolutely focused on destroying demand regardless of some collateral damage such as the regional banks. Thus. I cannot see what the bullish case for the markets is right now.

Having said that, I will follow price and not heed my opinions and emotions. That can get me in trouble. So far, the NASDAQ is running bullish and I am going to stay out of its way. The Russell 2000 is trending bearish in a meaningful way, and I am focused on that.

SPX Sectors Trending

The changes highlighted are from 2 days of trading this week. We see mostly an increase of the amber color signaling weakness. Here is the summary:

Perfectly Bullish (2): XLK, XLC

Short-term Bullish (2): XLY, XLP (although XLP is a weak short-term bullish)

Perfectly Bearish (4): XLU, XLRE, XLF, XLE

Short-term Bearish (3): XLV, XLI, XLB

The weakening of the SPX sectors is evident, again, except for XLK and XLC.