1. If you are not holding long positions in Facebook (FB), Tesla Motors (TSLA), Apple (AAPL) or Ambarella (AMBA), you may be shrugging your shoulders as to why the markets are sitting at highs. Moreover, if you're sitting on a portfolio overweight energy, industrials, metals or mining companies, you're probably wondering when the horrific bear market will come to an end. The bottom line is that the market is rising on a dwindling number of names.
If you're trading on the long side, you clearly need to be focused on the aforementioned high-growth, momentum-oriented tech stocks. But beyond that, I'd urge intermediate timeframe traders to keep an eye on the continued outperformance of the SPDR S&P 500 ETF (SPY) over the Guggenheim S&P 500 Equal Weight ETF (RSP), and aggressively evaluate your current risk. As a general of thumb, we don't like to see the SPY outperforming the RSP, as it's an indication of a narrowing market.
2. Did anyone not see the implosion in precious metal stocks on Monday? The Market Vectors Gold Miners ETF (GDX) closed beneath its lower, third-standard-deviation Bollinger band. As you can imagine, this isn't something that happens all that often. However, during past occurrences such a weak close did not immediately attract dip buyers. Bids generally don't materialize for two or three days after that initial close beneath the third-standard-deviation line.
3. We hear about the declines in energy and mining shares practically on a daily basis, but what about the diversified machinery and industrial equipment stocks? Names like Fluor (FLR), Emerson Electric (EMR), Dover (DOV), Eaton (ETN), Donaldson (DCI) and Colfax (CFX) have been torched over the past three to six months. While I tend to shy away from catching falling knives, it is worth noting EMR, DOV and DCI are members of the U.S. Dividend Champions list ¿ meaning they have increased their dividend twenty-five, or more, years in a row.
Any trading or volume profile related questions can be posted in the comments section below, emailed to me at firstname.lastname@example.org or posted to my twitter feed @ByrneRWS