I believe this is one of those situations in the market where it may not serve you well to think in terms of everything melting up or down across the board. Just as we have become accustomed to potent correlations across a variety of asset classes, my analysis coming into this week leads me to submit to you the idea that the broad indices may not do much this week, either way.
Instead, we could easily see a sector rotation out of technology and into the industrial/material/energy complex. First, the Nasdaq ETF, seen below, should illustrate why I am reticent to just cavalierly toss out a bunch of long setups to you for the upcoming week.
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Despite the temptation to extrapolate that the entire market is an easy short here, given the chart above, to do so would ignore the bases being built in the energy and materials. I will be keeping a close eye early this week on whether my rotation theory comes to fruition. If I see glimpses of it on Monday and Tuesday, then I will be quick to exit my technology plays and look at some key names in the sectors I mentioned above. I already own $ATPG, and that looks to be as good a setup as I can find for this week.
While many stocks became too extended last week, the energy and steel names, for example, consolidated nicely and look to be scalloping out multi-month bases.
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2:00 AM POSTS… Saturday night videos. Now that’s dedication.
You are right on about this inflection point of indecision. Swapped my precious metals (hat tip to Mr Gint for ANV and SLV) for a 10% VXX hedge last week. Taking a look at lightening up on tech for that ATPG play.
You rock Chess.
Thanks Chess.
The market really could do anything at this point, and there is no edge the way I see it (except perhaps in a few individual names here and there – but where?)
Now get some sleep!!
anyone who buys VXX as a hedge just shouldn’t be trading money for a living.
Who says I do it for a living…
Are you trying to say that when the market goes down VXX doesn’t go up (short term…I understand decay, etc).
Sold my TWM (will buy it back at a lower price later) and doubled my holdings of VECO, OVTI, and ATPG. Still holding DSX and YHOO and 40% cash).
Doubled my DSX holding as well.
I see AAPL has broken out too. $280 and rising.