The Weekend Report – The Cliff-Notes Version
Short and to the point this week folks!
Major Index Weekly Performance
Commentary: The Dow was a clear outperformer, while risk-on indexes in the Nasdaq and Russell 2000 struggled.
Sector Weekly Performance:
Commentary: Risk-on assets continue to struggle getting bid, while conservative areas continue to shine. We want to see Communication Services, Technology, and Consumer Discretionary get a bid for more than one day!
· Headlines led to some significant intraday moves throughout the week. Everything from potential impeachment to an earlier that expected scheduled date for trade negotiations with China (October 10th).
· Risk-on growth names continue to struggle building bases; We see a day of strength, then it gets sold off.
· I wouldn’t mind seeing a flush, as this usually leads to more sustainable rallies. Consider the dip we had in 2018 from October to December. After this (20)% dip, we have rallied and held-up very well. No, I don’t think a (20)% dip is in the cards, but a (5-7)% would be constructive.
· We remain in a new-ish range of $2960-3010 on the S&P 500. Friday, we tested the low near $2940, but closed right around $2960. Despite an ugly day on the surface, it was actually a very good sign from a technical standpoint, as key support held across many fronts. On Monday, it would be ideal to see additional follow-thru buying in Technology, Consumer Discretionary, and Communication Services. In short, we want to get out of the $2940-2960 range as soon as possible. As stressed several times, we want to see Relative Strength Index on the S&P 500 hold above 50, as usually good things happen when above this level. Today, we closed below this level at 48.66. This is not an immediate sell signal, but hopefully buyers come in soon for the bulls.
· While I wish we saw more downside leading to more risk/reward to the upside, we might not see much more downside short-term. The president knows when to tweet positive trade notifications and the market continually reacts.
· The $VIX, fear index, tested some key levels today, but struggled at resistance, which is likely bullish short-term. Monday will be interesting.
· Overall, we had a nice boost off the lows, but I wouldn’t be surprised to see another test near $2940-ish. The bulls need to see continual buying throughout the day on Monday and hopefully throughout the week. It has been a continuous theme where green days early sell off throughout the day. This needs to change for more monies to be added.
· Mixed signals include the Russell 2000 ($RUT) closing right at its 200-Day Moving Average and Nasdaq 100 ($NDX) slightly below its $7700 support level.
Have a great weekend. It could be possible that Sunday we do a video showing our research for portfolio construction. For those that requested the behind the scenes on this process, Sunday could be a possibility. We will keep you informed.