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The large caps are holding above their big gap from last Tuesday and acting relatively constructively. Both QQQ and SPY have consolidated near a potential pivot. Going above last week’s highs would be a buying signal. I would not trust those potential breakouts for anything more than a quick scalp because there is simply too much weakness among individual stocks.
In the meantime, the divergences continue. While defensive sectors like consumer staples (XLP), healthcare (XLV), and some semiconductors are perking up, small caps and many software/internet stocks are under pressure. The recipe to surviving in this tape (meaning limiting drawdowns and if possible, growing our accounts) is to trade smaller and be selectively active, only focus on the best setups, and be willing to play both sides of the market.
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