- There was very little movement, overall, but there was a "Whole Lotta Shakin' Goin' On".
- We saw this example of how the Fed's "easy-money-to-create-jobs" policy was turned upside down by the Bank of America.
- While consumers claim that they are becoming increasingly uncomfortable, AAPL made new all-time highs, and its market cap has overtaken that of GE's.
- China's Shanghai Index is about to fall off a cliff, yet its Financial ETF is telling another story.
- Dow Transports is threatening to become unglued, yet the Dow 30 is hovering over trendline support at new highs from the 2009 lows.
- Emerging Markets and the U.S. Financials appear to be gaining traction.
As can be seen from the following Weekly charts and 1-Week gains/losses graph of the 6 Major U.S. Indices, all of them, except the Nasdaq 100, saw profit-taking. The Dow Transports was especially hit hard...one to watch for further evidence of weakness, possibly dragging the others down, as well...although it's sitting at the bottom of a tight range and could bounce from here.
The Monthly charts and September's graph below show that the Russell 2000 Index is leading in terms of percentage gained, so far, for the month. It's the other Index to keep an eye on to see if weakness enters next week, or if it maintains its bullish leadership.
The Weekly charts and 1-Week graph below of the 9 Major Sectors show that profits were taken in the riskier, Offensive Sectors, while some gains were made in Health care and Consumer Staples. The largest losses were made in the Financials...one to watch to see if this continues.
The Monthly charts and September's graph below show that Materials and Energy still lead in percentage gained, so far, for this month...ones to watch to see if this week's downdraft continues, or if they resume their trek to finish the month even higher next week.
Lastly, the two Year-to-date volatility ratio charts of the SPX:VIX and RUT:RVX show that the SPX closed the week at short-term resistance, while the RUT closed above. In fact, the RUT:RVX closed at an all-time high, as shown on the third (Monthly) chart, confirming that Small Caps lead this current market rally in the least volatile environment, for now. This rally may not end until we see volumes become extremely frothy on the corresponding Russell 2000 E-mini Futures Index, the TF.
What do I take away from all of this? It appears that we have some Sector rotation going on as some markets (mainly the Defensives) pushed higher at lofty levels, and others have had some profit-taking. For the time-being, all I can say is that, generally, overall sentiment/momentum is still favouring the upside while volatility remains low, in spite of the conflicting data/events that I mentioned in my opening paragraph. However, most markets remain near their highs of this year and some people may consider them as being overbought. They are likely, technically, correct...however, in this Fed-controlled monetary environment, markets may not always pay attention to pure technicals, as the Fed's actions seem to remove some of the risk in going long at these levels. But, since markets may react to unexpected negative news events and are, no doubt, pricing in this risk, we may see a market that produces small daily gains in the days/weeks ahead...it becomes a slow, griding, melt-up. Time will tell. The challenge for me, as a daytrader, is in determining where support and, to a lesser extent, resistance lie for the day in this kind of environment.
Enjoy your weekend and good luck next week!