It seems so many were frustrated by the market last week, which I suppose isn't much different than the prior week, but the longer it goes on, the higher the frustration level achieved. Why are folks frustrated? I believe it's because the majority of stocks stalled out more than a week ago.
Well, that's the first part.
The first part is the stalling out. Then the minor leakage -- after all, before Friday's rally the Russell was down 4% from its high. The second part is big-cap tech/growth stocks. I'm talking about the Index-movers.
Look at Facebook (FB) , which hasn't done a thing in six months and last week saw it down 5%.
Amazon (AMZN) isn't much better, trading where it was in July.
Apple (AAPL) is where it was last summer, as well, and is flirting with an uptrend line. In fact, all three had great earnings and are down on the year. It takes an awful lot of small caps to offset these large caps weighing on a portfolio.
Even beloved Tesla (TSLA) , while not down on the year, has gone from an exciting stock to dull as can be.
The flip side is the banks and energy stocks are terrific. That means we are still in an either/or market. But take a look at this long-term chart of the Bank Index. It is approaching its all time high from back in the days before the Great Financial Crisis. You might recall I spent much of last summer praising the banks with those long bases that had developed. I even recall someone asking me why I would rather own a bank than one of the FANG stocks. My reply was the banks had bases and the FANG names did not. But even I think those old highs are going to be tough to get through on the Bank Index.
In this market environment, it's always hard to imagine these beloved FANG names breaking down. Heck, most stocks -- not just stocks that are in so many portfolios -- threaten to break down and then get saved. In my view their lack of participation is not a negative for the market, because it allows other stocks to get some love. However, should they break down, I would consider it a negative. It is important to remember they still control the major indexes for now.
The Overbought/Oversold Oscillator is still over the zero-line. If the market gets a whoosh down in the coming week, I would expect to see the Oscillator push back to an oversold condition. And who knows? Maybe a woosh down would shake the complacency I still see out there. In fact, I suspect it would. Will the move in interest rates do it?