Market Outlook
In the race to new all time highs, Nasdaq won the race last week as they tested to new highs on Friday. With a big help from the Tech and Semi sector. The weekly chart for Nasdaq is showing us a clear as day macro bull flag, which goes without saying a clearly bullish sign.
While virtually every sector in the S&P 500 are in clear stage 4 breakdowns or in there own corrections. Tech and Semi's continue to just simply not care about rates ripping higher.
This breakout in the 10 year is one of the main reasons, we are seeing such weaknesses across most sectors.
If I cropped this chart out of the REIT sector and asked you to guess which sector it is, there are 8 others that look exactly the same. As this slow breakdown stage unfolds in the sectors, while the index's continue to flag out near highs.
With all these weakness, it continues to be easier to focus on the relative strength and that is very clearly focused in the tech and semi space.
While most sectors are testing or breaking below there 200 day moving averages or in the 4th plus week of a breakdown stage. Tech has not a care in the world as they hit new all time highs this week.
Even our top idea from last week, had a great day on Friday closing up 7% and for now giving it the room vs $60 for a few weeks to see if it can continue to climb in this blue sky area makes a lot of sense.
With the overall weakness in most sectors, they will still need to base out before there is any real climb higher for the sectors and the names inside those sectors. While for now, there is a small list of Tech and Semi names showing A type set ups.
SKHY which was a member call out from our good friend Earick, is a Semi new issue, that is forming the textbook set up in a recent IPO that we care about. When a recent IPO is able to climb back towards its all time high is by far one of the most bullish bull flag patterns we scan for. The only hard part with this set up, is the time needed. When SKHY can clear north of $200, it becomes a battle of your patience, where giving this name 6 months to a year can often lead to outside returns but with that you have to give the name the proper time and room. For us PLOD stop raisers it can be hard to give it the proper room.
With a setup like this, less is more, so giving it the proper room is easier then buying a ton of size for a quick 3 day move.
From Bennett
Founder Big Picture Trading
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Cyclical - sectors that are more sensitive overall market conditions.
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Defensive - sectors that tend to outperforming during sub par market conditions.
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CORT
HPE
PM
SKHY
SIMO
XMTR
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