The Nasdaq is giving off some thunder via heavy sell volume as the S&P 500 drifts into new high territory.
This rally, so far, has been tech dominated. If the Naz drifts lower it’s likely everything else will.
Not much conviction in terms of breadth. The Dow 30 has been unable to achieve new highs with the rest of the market. Sector-wise, the key Transportation ($TRAN) and Brokers ($XBD) indexes are jumbled up in their major moving averages under yearly highs, while the Semiconductors ($SOX) are treading water at new highs.
There hasn’t been a lot of thrust to the upward momentum, which means it’s likely to pullback soon.
Oh, a storm is threat’ning
My very life today
If I don’t get some shelter
Oh yeah, I’m gonna fade away
War, children, it’s just a shot away
It’s just a shot away
— Rolling Stones, Gimme Shelter
An all-time high for the S&P 500 is brewing. It won’t take much. Odds are we’ll see it before the week’s out.
That’s all this business of speculation is. Odds.
We’ll hold our Seller’s Bias, despite what appears to be stacking up here.
Action wise we do nothing here. We don’t want to be too short. We don’t want to be too long.
But, we’re once again feeling a melt-up is in the cards given the unwillingness of the major indexes to sell.
It’s not hard to see everyone getting sucked into a tornado of bullishness that has even the staunchest of Bears running for cover.
Gimme shelter, we hear ’em cry.
We’re still holding our Sellers’ Bias as long as the volume stacks up convincingly against the Bulls. Price action for more than a year now has been like a boom-a-rang that keeps coming back to the Bull’s hands.
No one, including us, will be surprised to see the major averages hit new highs. Bears are getting slaughtered here. We’ll piece it together once those highs are made.
On the long side, we’ve been big believers in Tesla Motorsk Inc. (TSLA). The stock has broken north of a sound base. Its new product and earnings trajectory have the makings of a historical winner. More on this later.
In the meantime, stay safe. Keep your powder dry.
Upward drift in price action lacks volume, lacks conviction, lacks sustainability. We’re long overdue for a correction. The only thing the Bull has going for it, outside of a solid economic base underpinning its future, is its tendency to fuck the Bears over. Watch as key moving averages become entangled here. We may see a bit of sideways action this week. We’ll be ready for whichever way we bounce of this zone.
Strong earnings across industries continues to aid the confidence of Bulls. But it’s really the reaction to this data than the data itself that’s more significant in the short-term. Sure, we’ve seen a lot of rallying behind the narrative, but volume holds the real clues to where the funds are pushing.
Sellers handed over another royal flush Monday. The smell of panic has set in with sell volume days steadily rising over the past three weeks. Distribution galore.
The 50-day averages have been convincingly taken out to the down side. Tech remains a relative strength pocket, but has crumbled, lending emphasis to the relative part of the equation.
Yes, we’re at Seller’s Edge now. Our bias has changed for the first time in more than a year. We could stay here a day or months. It all depends on what the market coughs up as evidence.