Morning Note: A Quick Technical Look at Tech

In that there’s a deep read (our main weekly message) coming your way shortly, I’ll keep this morning’s note brief and to the point.

In our April 29 video, where I performed a quick technical analysis for you on each of our core positions, I mentioned the “heaviness” in the tech sector; I pointed to the extended negative divergences in our momentum indicators (yellow lines in panels 2 and 3 below) and a sell signal (red circle in panel 2) in the MACD. 

While I noted that this combination (despite the sell signal in panel 2) wasn’t in and of itself a sell signal, it pointed to heightened risk of a near-term downside move:

XLK (our tech ETF):


And here’s a zeroed-in look at the position since:


Breaking below the upward sloping yellow line in panel one was indeed the sell signal, losing the red line (50-day moving average) was confirmation. It’s bouncing nicely (as to be expected) this morning off of that first support level (top white line).Very important for the tech bulls that it recapture that red line over the next few days.


Asian stocks struggled overnight, with half of the 16 markets (3 were shuttered) we track closing notably lower.

Europe’s coming nicely out of a sea of red earlier in its session, with all but 3 of the bourses we follow now in the green.

U.S. major averages are bouncing off of a rough couple of days: Dow up 449 points (1.34%), SP500 up 1.30%, SP500 Equal Weight up 1.23%, Nasdaq 100 up 1.35%, Nasdaq Comp up 1.36%, Russell 2000 up 2.09%. 

The VIX (SP500 implied volatility) is down 15.59%. VXN (Nasdaq i.v.) is down 11.17%.

Oil futures are down 2.48%, gold’s up 0.16%, copper futures are down 0.42% and the ag complex is down 1.36%.

The 10-year treasury is up (yield down) and the dollar is down 0.04%.

Led by MP (rare earth miner), ALB (lithium miner), bank stocks, base metals miners and solar stocks — but dragged by ag futures, uranium miners, base metals futures and silver — our core mix is up 0.42% to start the day. 


If, like many, you’re confused by what you thought markets were all about and what you’ve witnessed over the past year, well, according to the authors of one of the best books I read in 2020, you should be:

“The conventional understanding of the forces that determine the financial markets and the economy is inaccurate, and accordingly has no hope of shedding any light on the next financial and economic crisis and its consequences.”

— The Rise of Carry


Have a great day!

Marty
 
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