8/11 Recap

The selloff continues but you shouldn’t be shocked, I’ve been highlighting the weakness in the SPY for a while now. The market is alot simpler when you let the charts guide you. Simple rule of thumb, the 8 ema is your barometer on short term trends. When you are over it, you’re strong and when you’re below it you’re weak. On the daily timeframe you can see below, we’re below many moving averages now, this kind of technical damage just takes time to repair. You need to see these averages flatten out and then we need to reclaim them, it is usually a multiweek process.

If you zoom out this blip is just a small one but we have caused no damage and are still within the larger nearly year long uptrend and until that changes, this is still a bull market. We are sitting ontop of the 8 ema weekly now, and have finally filled the gap from July today. In theory this is a natural spot for a bounce, if not, that uptrend line is our destiny. It is only 2.5% away now and we haven’t tested it in 3 months.

At this moment most tech stocks are weak, it happens, they’ve been straight up for nearly 8 months now. A cool down is normal, that’s why I’ve pointing out the overbought RSI for a while, sometimes it takes time to play out, but it almost always does. Look at this breakdown on the XLK, the tech ETF, last week. When it closed below that 8 week that was your cue tech was going to have issues. Over the weekend I highlighted the Apple breakdown. Now the XLK macd is rolling negative on the weekly and this could be a while before tech is where the strength is.

You may ask why am I holding my Amazon leaps if tech is breaking down? Aside from the great quarter they reported, they aren’t actually in the tech etf. They are in the XLY, the consumer discretionary and that is actually still above the 8 week as I will highlight below.

At this juncture the current pockets of strength are in these other sectors below.

XLV - Healthcare

XLE - Energy

XLY - Consumer Discretionary

XLI - Industrials

Trends

Week To Date

2 Week