For weeks on end -- or has it been months? -- we saw mega-cap tech stocks as the only place to be. Then along came July 13, and that changed. For the first time since the peak in June, we saw other groups -- the down and outers -- come alive. But thus far they have only come alive on alternate days.
We still have the channel in place, but let's look closer at the chart of the Invesco QQQ Trust (QQQ) . Look at the long stretches of up days since early May. The first thing to notice is that there have not been consecutive red days, since early May. But look closely. Those series of persistent up days ended with that big reversal nearly two weeks ago. Since then, the best the QQQs have been able to manage is two up days in a row.
I grant you that is not a big deal, but it is a change in the pattern. I'd watch to see if the new pattern persists. I'd also pay attention in case we get two consecutive red days, because that, too, would be a change.
But now let's look at that same period of time for the small cap using the Russell small cap fund (IWM) . The IWM hasn't managed to put together more than two green days, either. But more so with the exception of those back to back up days (off that reversal on July 13), it's also been pretty much an every other day affair here, as well.
Wednesday saw both the QQQ and IWM move in lockstep, which was a change from the last two weeks, too. The question is, are we seeing a change in leadership or are we just seeing a pause in the leadership of the last few months?
Typically a change in leadership arrives after a correction, Can we consider the big reversal day the correction? It's not as though the ratio of IWM relative to the QQQs is sending strong signals is it? Heck, I'm still waiting for the banks to rally.
Generally speaking, the market internals were nothing to write home about on Wednesday, but none of the indicators changed.
On the precious metal front, there was very little change in the Daily Sentiment Index (DSI) readings (this happens, and I cannot explain it) except that gold (GLD) moved to 91. It also hit my next measured target so I'd be in favor of seeing it rest or pullback now. A move to the red line or a sideways move like we saw in the spring (black lines).
Silver's DSI did not change and remains at 93. It is not yet at the measured target of 23-24.