It's Friday and I'm simply taking in the market action. I did have a chance to watch the vast majority of the Trump-Biden debate Thursday night. I will say this one came across much better than the last.
There was no clear-cut winner for me, but fossil-fuels will be a clear loser over the next four years if we see a Blue Wave. The opposite can be said for clean energy and green tech. I do believe green will win either way, but old school energy is the wildcard post-election.
That doesn't take energy off the table for me as a trade. If anything, it has me watching it closely. If we don't see weakness, then it would reinforce the idea a reversal is in the works. However, we are seeing some weakness Friday in the sector. The overall market has turned red as the possibility of a stimulus bill before the election continues to weaken.
Don't be shocked if someone from D.C. tries to add a ray of hope into the weekend, but as I've been saying all week, I simply don't see it happening. The idea of stimulus now is simply a carrot to distract from the election.
But as we look into 2021 and beyond, clean-tech and green-tech should be the long-term winners. It should be noted that this is still an emerging sector. That means the market is still trying to determine valuation models. In short, expect heightened volatility. Expect valuations to come with non-traditional rationale and logic to take a backseat during short periods of time both in the up moves and down moves.
Intel's Waning Influence
Intel (INTC) being down 10% Friday, but the Nasdaq barely in the red demonstrates how insignificant the company has become in its overall influence on the markets. Wall Street appears to view Intel problems as Intel problems, not market problems.
As we roll through earnings season, this is certainly something to watch. When a big name doesn't influence the sector, up or down, then the name needs to be watched in a vacuum in terms of a trade.
SPYing a Short-Term Bottom?
It's no secret I haven't loved the equity market recently. Gold has been barely hanging on to the bullish look it has been sporting. Bitcoin has one of the best-looking technical setups I see out there. And, yes, it pains me a bit to write that. With that being said, I'm starting to see a short-term bottom form on the S&P 500 SPDR ETF (SPY) as well as the Nasdaq 100 (QQQ) while the Russell 2000 ETF (IWM) continues to show strength.
Note, neither SPY nor QQQ have triggered reversal (bullish) crossovers, but both are very close. It makes aggressive selling here or shorting a high-risk, high-reward scenario.
The risk is high due to the potential bottoming and possible reversal. The reward is high because the support levels are very close to current levels.
If support fails, then I anticipate a quick 5% drop in both those large-cap indices.
While I haven't been buying today, I do anticipate I'll be gathering a list of names over the weekend. I'll be looking to trade on the long side next week, possibly as early as Monday. Until then, I'm content taking a conservative stance into the weekend.