MarketSmith powers the charts in this video.
All major indexes closed above their 20 and 50dma. Breakouts are following through for the most part – especially after earnings gaps and in high-momentum stocks. This is bullish. Nothing goes straight up. It is completely normal to see some backing and filling, some consolidation or a pullback after Labor Day weekend. As long as the indexes keep closing above their 50 and 20dma, the bulls are in charge which means that dips in strong stocks are likely to be bought.
Tech stocks started to move in tandem with interest rates again. As rates pulled back in the last couple of weeks, tech stocks rallied. As rates bounced on Friday, tech stocks faded. Even if tech takes a break here, it seems the market is more likely to correct through sector rotation as opposed to a wide-spread selling. The slack in tech on Friday was picked up by energy and metal sectors, which perked up. When those sector rally, tech is typically under pressure.
Chinese ADRs rallied again as China is injecting liquidity to jump-start its economy and stock market. It seems they are not worried about inflation over there at all. The China Internet ETF, KWEB is still a mess technically speaking but it is something I am keeping a close eye on. I traded FUTU, XPEV, BIDU during the week. FUTU weekly Calls went up 11x.
In the meantime, high-yield stocks are getting smoked. Consumer staples and utilities are having one of their worst year in a while. People are not searching for yield in stocks anymore as Treasuries and shorter-term government bonds offer plenty of yield currently.
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