Almost There
Friday was an ugly day for the bulls on top of Thursday’s rout. One or two more days like that should create enough panic to wash out the remaining sellers and give us a low. What we don’t want is an intervening weak rally based on some geopolitical headline. When a decline begins to look like a waterfall like the S&P 500 does below, it’s time to have laser focus. Prune the low conviction holdings. Add to high conviction ones. Find some new opportunities. When I want more exposure but I can’t find names at the right price or set up, I will buy some indices and then re-allocate at a later date.
Notice anything different about the Russell 2000 below?
It peaked before the S&P 500 and led the decline. Now, it’s not making new lows (yet), is not in a waterfall and it was actually up last week. The S&P 400 looks similar. That is a divergence and something to watch closely for signs.
Below is a chart I often share. It’s the high volatility stocks versus the low ones. It also not breaking to new lows, at least not yet.
And now that I am finishing this on the train ride home from UCONN’s epic win last night, the pre-market futures have totally reversed and they are up 1%. That is not what I want to see. For the nimble traders, that is a short-term selling opp.
The kid who hit, THE SHOT, Braylon Mullins stood in the lobby for 40 minutes until every single person who wanted a pic or autograph was happy.
And the MVP, Tarris Reed, with the infectious smile came over and high fived our group.
There is a reason why Connecticut is the Basketball Capital of the Universe. On to Phoenix. On to Indy. GO HUSKIES!
On Friday we bought more QLD. We sold XLV, XHB, ITA, MDY, XRT and some SHW.
