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July 24, 2020
Stocks – None
Macro – XBI, XLK, SMH, SPY
Mike’s Reading The Markets Premium Content – $35/Month or $300/Year
- EPS Trends May Be Stabilizing, Positive For Long-Term View On Stocks
- How Low Can Markets Go If The Uptrends Break
- Trends Suggest Lower Prices Lie Ahead – Midday
- Bears Circling In On Apple
- Uptrends Breaking Signal Bearish Turn
- The Momentum Trade Is Breaking
- Morning Write-Up
- AMD Breakout, Markets Holding – Midday
MICHAEL KRAMER OWNS XBI PUTS
The risk-on trade may be in serious jeopardy, and that may be bad for the entire market. When digging deeper into ETF trends, it seems that many that have led the market higher are now beginning to roll-over.
The best performing sectors have all been risk-on in sentiment, while anything tied to global growth or risk-off has underperformed. Biotech, Technology, and Semis have all been far and away, the best performing sectors. If these sectors begin to retreat, it likely means the big market rally will turn lower too. (Premium content – How Low Can Markets Go If The Uptrends Break)
(Mott Capital – Reading The Markets Content)
Biotech (XBI)
The XBI has been the winner this year, rising by 18%. They’re now two bearish signals that have been presented. First, the relative strength has flatlined since April, despite the ETF rising to record highs, a bearish divergence. Now for the first time, we are seeing the RSI sink, and that would suggest that all that bullish momentum is leaving the ETF and sector.
Additionally, the ETF has now broken a significant uptrend, a drop below $110 likely triggers a deeper move to $105 or less.
Technology (XLK)
The technology ETF XLK has risen by almost 15% this year. It, too, has a bearish divergence in the RSI, which has now fallen to the lowest level in some time. Additionally, like the XBI, the XLK has broken an enormous uptrend that has been in place since mid-April. Based on the current set up, it appears the ETF could fall to around $99.
Semis (SMH)
The SMH ETF is also flashing the same bearish divergence on the RSI, but it is yet to break the uptrend. With the potential to drop to around $149.
Cooper
Meanwhile, copper prices have been weakening and showing many of the same characteristics as the sector listed above, with a chance for the metal to fall to around $2.65.
10-Year Yields
We have seen a big move lower in yields, with the 10-Year testing support around 55 bps. A break below that support sends yields to around 35 bps.
Finally, the high yield ETF HYG could be on its way back to $80.50.
Just keep an eye on these, they will tell you the direction of the markets next move.
-Mike
Mott Capital Management, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future results.
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This report contains independent commentary to be used for informational and educational purposes only. Michael Kramer is a member and investment adviser representative with Mott Capital Management. Mr. Kramer is not affiliated with this company and does not serve on the board of any related company that issued this stock. All opinions and analyses presented by Michael Kramer in this analysis or market report are solely Michael Kramer’s views. Readers should not treat any opinion, viewpoint, or prediction expressed by Michael Kramer as a specific solicitation or recommendation to buy or sell a particular security or follow a particular strategy. Michael Kramer’s analyses are based upon information and independent research that he considers reliable, but neither Michael Kramer nor Mott Capital Management guarantees its completeness or accuracy, and it should not be relied upon as such. Michael Kramer is not under any obligation to update or correct any information presented in his analyses. Mr. Kramer’s statements, guidance, and opinions are subject to change without notice. Past performance is not indicative of future results. Neither Michael Kramer nor Mott Capital Management guarantees any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment commentary presented in this analysis. Strategies or investments discussed may fluctuate in price or value. Investments or strategies mentioned in this analysis may not be suitable for you. This material does not consider your particular investment objectives, financial situation, or needs and is not intended as a recommendation appropriate for you. You must make an independent decision regarding investments or strategies in this analysis. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Before acting on information in this analysis, you should consider whether it is suitable for your circumstances and strongly consider seeking advice from your own financial or investment adviser to determine the suitability of any investment.
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