Apple Is Barely Holding Support. Should the Bulls Worry?Apple rallied in December after holding $120. Now it’s back and threatening to break support at that level.
The price action is part of the ongoing technical weakness in the smart-phone giant. It had a false breakout in January and a trend-line failure last month. Today we got a clue why: AAPL has cut production of its iPhone 12 mini, according to Nikkei . Once again, technical analysis is miles ahead of fundamental analysis.
Here’s another interesting chart. It compares moves in AAPL with the SPDR Financial ETF since February 16 – the day financials broke out to a new 13-year highs.
The 15-minute interval demonstrates how XLF has often climbed at the same time AAPL declined. While doesn't mean exactly that investors are selling one to buy the other, it does highlight the market’s current sentiment.
Given the odds of strong economic growth and higher interest rates, plus wide differences in valuations, this could be a longer-term trend. Some traders may struggle to accept a shift toward cyclicals and value stocks, but it seems to be jumping off virtually every chart we view.
“Embrace change,” is one of our core values at TradeStation. Now could be the time to apply this principle in your own investing.
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Rotation
Toolmakers Have High Basing PatternsAttention is shifting toward industrials as technology and the Nasdaq struggle. Two companies in the space have potentially bullish patterns: Illinois Tool Works and Stanley Black & Decker .
ITW is the larger company with a market cap of about $68 billion. It broke out to new all-time highs in August and consolidated for the next seven months. Now the bulls may be ready to return.
First notice the high basing pattern above old resistance. It first held $190 on October 2, turning the pre-Covid peak into a new bottom. It made a slightly higher low four weeks later. ITW revisited this zone in late January, once again making a slightly higher low.
Meanwhile, a downward-sloping trend line took shape – only to be broken at the beginning of March.
Also notice how the 50- and 100-day simple moving averages flattened out and squeezed on either side of the price.
SWK shows similar patterns. It made new highs above $176 in October and spent about six months chopping on either side of that level. Like ITW, it had a descending trend line breakout and a tight squeeze between the 50- and 100-day SMAs.
The fundamental stories for these companies also appear favorable, given the improving economy and prospect of increased infrastructure spending. SWK may appeal to value investors, trading for less than 20 times forward earnings.
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Tesla Lags as the 'Old Economy' Makes a ComebackTesla is probably the most prominent stock in the last 12-18 months, surging about 2,000 percent from its peak to trough. But now it may be at risk as sentiment pivots from "new economy" stocks to "old economy" stocks.
This chart compares TSLA’s relative strength to the SPDR Consumer Discretionary ETF. (TSLA is now the #2 holding in the sector behind Amazon.com.) It shows how the electric-car maker is starting to lag the fund after a long period of outperformance. AMZN has been lagging even longer.
In their places, the sector’s top performers in the last week are now the beaten-down reopening stocks like Carnival (+29%), Royal Caribbean (+29%) and Norwegian Cruise Line (+24%). This illustrates the kind of rotation underway as capital returns to more traditional companies.
Two other chart features stand out with TSLA. First, it’s breaking the 50-day simple moving average (SMA). It’s managed to hold this line several times in the last year. But will that remain true at a time when bond yields are spiking higher?
Second, notice how TSLA made a new all-time high over $900 on January 25. Also notice how MACD was already falling – a classic case of bearish divergence. That's another potential sign that the blistering rally has cooled.
Finally, it’s worth remembering TSLA’s history. It rallied 670 percent between March 2013 and September 2014, and then languished for the next five years. TSLA’s current run is a similar (slightly shorter) length. Is it time for another pause?
The same might be applied to solar energy , which is also under pressure on the heels of a 400 percent run since March 2020.
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Bitcoin Entry Prices for Next Bull Run! Hello guys,
today’s day trading analysis will be on BTC
There is a very nicely looking volume-based setup called the “Volume Accumulation Setup“
First, there was a rotation in which heavy volumes got accumulated (traded). You can see the volumes on the Flexible Volume Profile indicator below.
Then, after the big guys (trading institutions) placed their big trades there, they pushed the price upwards into an uptrend.
This uptrend tells us, that the volumes placed in the rotation (blue rectangle ) were Longs.
This is an information we can work with. Now we know where strong institutional buyers placed a lot of their Long positions.
This are is now very important place for them.
When the price makes it back to this heavy volume area again then, those buyers will want to protect it and to push the price upwards from there again...
Most likely from the place where they placed the most of their positions.
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Algorithmic Rotation Massive rotation no evident in the past 48 hours as algorithmic trading programs are attempting to quietly enter positions on behalf of institutions in order to avoid a price shock. At any moment this rotation will turn into a massive open drive either bullish or bearish and will push prices to new levels. Impossible to tell which direction at this point.
Say it Ain’t So! A Double Top on Apple?It’s not hard to be bullish on Apple given the potential for an iPhone upgrade cycle. But now the unthinkable may be occurring on the tech giant’s chart: a bearish double-top reversal pattern.
Notice how AAPL tried to push above its previous high in the early minutes of December 29, only to get rejected. That session and the next three were all the same, with early pops followed by closes near the lows.
The fact this occurred in the quiet week between Christmas and New Year’s is also noteworthy. It suggests big money never endorsed a breakout.
Price action since then has also been inert, with very little bounce. MACD has turned negative and the price is struggling to hold the 21-day exponential moving average (EMA).
Overall, AAPL’s chart isn’t especially bearish. But another trend is potentially bearish: broad selling in other large-cap technology stocks. Money seems to be shifting away from the big names in favor of cyclical value plays (like energy), or newer and smaller disruptors like Airbnb.
AAPL could become a “source of funds” under those circumstances. Bulls may want to tread with caution, especially now that a double-top has appeared.
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CADJPY > Remarkable Structure Level, Would It Hold This Time!?Analysis of #CADJPY
Hello friends,
market at structure level which previously market dropped from several times,
I need to careful here I do not like to trade exhausted structures so I will look for a conservative entry on rotating patterns if it happened
I hope this idea earns your likes and comments, that will really support me to keep providing you valuable analysis
Really appreciate your support and feedback
Check today analysis below⠀
_____________________________________________________________________________⠀
-DISCLAIMER: This Information Is Not a Recommendation to Buy or Sell. It Is to Be Used for Educational Purposes Only⠀
-⚠ Please Note This Is Just a Prediction and I Have No Reason to Act on It and Neither Should You
Too hot, too russianSurgutneftegaz is the most undervalued company in the Russian energy sector. A frightening amount of money in the company's accounts. decade in the range of 25-35 rubles... current levels - strong buy... we buy from the current levels, expecting 36.1 in the coming days.
Big Russian long is comingRussian equities look really good at the end of 2020 & 2021-2025! We take into account declining dxy and rising em currencies, sector rotation and increasing demand for commodities in china, with a favorable pace of capex L-shaped recovery in the energy sector... we also expect reduction of political risks in Russia more, than in other em... the recovery of the Russian economy after the 2008 crisis was frozen in 2014 due to the "sanctions wars"... - in the context of the end of the pandemic and the change in the socio-political paradigm.., we expect the growth of Russian economy (next 8 years) and the growth of equities (next 5 years)...
Growth Portfolios did not perform great today.The Investors Business Daily 50 ETF (FFTY) was down 0.5% while the major indexes were setting new records. The rotation was not friendly to growth stocks.
Today's rotation was a bit strange because it was not a particular switch in Industry sectors (like Tech to Utilities) but rather a rotation from Mid Cap to Small, Large and Mega cap. Actually VOT (mid-cap) still had a small gain, but trended down the entire day.
Why?
There are two factors in my opinion.
1) The post-pandemic economy. Small Caps continue to get energy as they will benefit from a recovered economic situation in the US and have a high potential to be the next growth stock.
2) The weakening US Dollar. Large Caps (and their big sibling mega caps) would be the most likely to benefit from a weakened dollar as exports will become cheaper in foreign markets, increasing sales while and multinational subsidiaries revenues are more valuable as the repatriate to a cheaper US dollar.
I could be misinterpreting but just trying to make sense of a day when the entire market goes up but a growth portfolio goes down. Thankfully, I still have my XLE (the new growth ETF lol) in play.
Zoom testing convoluted levelTechnical analysis
From October 19th, we have seen a 26-trading-day downtrend. The second attempt to break the trend was at the 38.2% fibonacci retracement level, which failed.
We are now trying to test the same downtrend line (Red arrow), while also testing the 61.8% fibonacci retracement level.
The 50sma which is converging with the 50% Fib; which seems to have a heavy resistance weight.
OBV is in a range.
Rotation analysis
Cloud/WFH stocks saw a big rally in response to the pandemic. With vaccine news, the gave some of it back.
Looking at the ratio of Value vs Growth in the $SPX, we still haven't broken the uptrend; indicating strength is still in play in growth.
I expect the small caps to continue to outperform if we get the stimulus that is anticipated in the next couple of months.
The Nasdaq Is Struggling at This LineLast week we cited the falling trendline in Apple. So far, it hasn’t broken out. Not surprisingly, this pattern appears in other key names like Facebook and Advanced Micro Devices. Most importantly, it’s also on the Nasdaq-100’s daily chart.
The tech-heavy index has been fighting this downward trend for most of November. This morning it made an attempt to rally above it but only stalled and made a lower high versus Tuesday.
Another key chart feature for NDX is the large bearish engulfing candle on November 9 – the same day Pfizer announced its coronavirus vaccine.
The stock market has undergone major shifts since then as investors embrace the reopening narrative. Energy, financials, industrials and small caps have soared. The old tech leaders have been neglected.
It’s also important to note that NDX initially led the bounce after the election. But then it got hammered by the vaccine news. That kind of failed rally attempt might be especially bearish because it produced a false breakout.
Finally don’t forget about bond yields, which may rise now that bond prices are near the top of their channel. Higher yields can reduce the appeal of high-multiple growth stocks.
Traders may want to keep their eye on NDX and consider its downside potential, especially if the broader market pulls back. Nasdaq and growth stocks may become a source of funds for investors looking to add cyclicals like financials.
TradeStation is a pioneer in the trading industry, providing access to stocks, options, futures and cryptocurrencies. See our Overview for more.
Rotation hedge with Energy ETFOk boyz, so you guys are strong believer in momentum, you've ran your backtests on US Sectors and fund out that with a roughly 55% probability the best performers of last year will be the best performers of the next year. So you are still long tech like crazy and believe the FAANG stocks will keep rising. However what does financial professionals like to do? They hedge part of their risk, they maximize their sharp ratio by minimizing volatility with diversification in uncorrelated assets.
What is your biggest risk right now? With a new vaccine on the way? => A big rotation of smart money from leaders (tech, healthcare) to laggards (Energy, Financials, Transportation, REITS). It's already happening right now.
XLE US is down 45% year to date, it is the ultimate laggard ! And you know what? Historical probability of worst laggard to move to the top five leaders of next year is 65%, odds are in our favor.
The ETF showed strong momentum last week with a nice weekly hammer candlestick with strong volume, this is a bullish reversion pattern. Let's wait for confirmation on Monday's open, if it confirms, we are catching the first wave to a nice ride up ! up to recovery and post covid world. The vaccine wont be massively available and massively distributed before mid 2021 I believe, HOWEVER the stock market is merely the second order of the real economy, not the first order! It is the acceleration of the economy, so as soon as the vaccine is being shoot the first person, the widespread reopening will increase tremendously.
Option 101 => acceleration = second order = GAMMA, we want to be long gamma right now => buy calls 3 months on XLE. To save some carry cost, i would suggest a strike at 110% of the current spot, this translate to a roughly 35% Delta. This is quite out of the money but i believe the volatility on this sector is going to up with the spot.
my pick : call 31Mar2021 strike 37. Delta = 24%,
Remember: this strategy makes sense if your portfolio is globally long tech, and please do not risk more than 5% of your portfolio value with the premium. This is not WSB :D
Bitcoin Dominance RetracementBitcoin Dominance Retracement
BTC reaching $16500 Resistance could see a pullback and ranging for the following months.
Alt coins may see cyclic rotation and BTC.D dropping into the 40-50% region and eventually 15-20% region.
Rotation from growth to value: updateAt the beginning of September I forecasted that we would likely see some rotation from growth to value in the next few months, and I laid out three target prices for the RSP (equal weight) to SPY (cap weight) ratio. This ratio has continued to behave fairly predictably, oscillating within its seven-month range and making fairly perfect touches of the target levels.
Lately we've been making higher lows in this ratio, which suggests that it might be working itself up to an upside breakout. We've obviously achieved my first price target several times and tested the second target twice. the most recent test of Target 2 came this morning after Pfizer's vaccine news.
In my opinion, Biden's victory and the prospect of an effective vaccine both make value rotation increasingly likely. The Democrats have talked of taking anti-trust action against large-cap growth companies, and a vaccine means pandemic growth winners like Amazon may soon see more competition from value companies with more in-person traditional business models.
A vaccine of course won't change consumer behavior right away. It has to be approved, manufactured, and distributed. But I do think we will sometime soon take a run at Target 3.
Sector Winners and Losers week ending 10/16It was a back and forth week with Technology (XLK), Utilities (XLU) and Energy (XLE) all fighting for the top spot. Even Industrials (XLI) made a late effort to end the week at the top.
In the end, the safe haven of Utilities (XLU) won the week as investors fled more volatile stocks for something that everyone needs going into the winter. Heat!
Communication Services (XLC) and Technology (XLK) drove the early week gains in the market. But they could not hold on to the lead, nor could they keep the market in it's upward rally. Both faded throughout the week as did the major indexes.
Energy (XLE) had a couple good runs through out the week as crude oil prices rose on news that the national supply was lower than expected. Low supply means demand is returning and higher prices. That's good news for the big energy companies, but ultimately investors took profits at the end of the week.
Consumer Discretionary (XLY) was doing well early in the week thanks to Apple's (AAPL) breakout on rumors of a new phone. "Buy the rumor, sell the news" is exactly what happened as Apple and XLY pulled back after the new phone was confirmed.
Nothing like the soft comforting warmth of having your money in Utilities (XLU). Maybe I should try that.
SWBI 15min Chartshould move back to the bottom side of the channel in the short term, allowing for the next leg up in the long term.
Sector Winners and Losers week ending 10/2It was a back and forth race for the SPDR ETFs this past week. In the end, Real Estate (XLRE) was the winner.
Utilities (XLU) had a week of steady growth but could quite beat out Real Estate.
Technology (XLK) did well earlier in the week but sold off at the end on bad news.
Energy (XLE) had relatively big gains on Friday, but overall still a loser for the week.
Look for rotation from growth to value in September-OctoberI posted this on August 27, but a moderator blocked because I had a linked to an offsite chart that the mods felt constituted advertising. (Apologies to the commenters whose comments disappeared along with the post.) I kinda wish I had reposted right away, because the post ended up being pretty prescient. (I had predicted that the S&P 500 would pull back to at least 3400 and that investors would begin to rotate to value.) But, I think it's still relevant enough for a repost. I've updated it a little in light of last week's selloff.
The S&P 500 has been on a monster run since March, surging to new record highs. That's partly because massive government stimulus produced a rapid economic recovery, with consistent month-over-month economic growth and an extremely high rate of positive economic surprises. It's possible that the economic data will turn more negative in September if Congress doesn't succeed in cutting a new stimulus deal. But so far the economic data still point toward continued recovery in the back half of the year. The ECRI weekly leading index has slowed since June, but it's still trending upward. We had good jobs numbers and good PMI numbers in August. The only really worrying sign was that consumer confidence crashed last month. The effect hasn't yet shown up in any consumer spending data, however. Overall, the economic numbers militate against a broad stock market selloff in the next few months. Having said that, it's important to note two facts.
First, September is traditionally the weakest month of the year for stocks. Volumes fall off with the end of the summer earnings season, and in election years there's political risk. In fact, in presidential election years when an incumbent gets ousted, there tend to be steep selloffs from February to mid-March and from September to October. Consistent with that pattern, we saw a February selloff earlier this year and a mega cap selloff in the first week of September, and the incumbent is trailing in the polls by an eight-point spread.
Second, growth stocks have pretty stretched valuations right now. That's especially true of the mega cap FAANG+ stocks. Even after last week's selloff, for instance, Microsoft is still trading about 25% above its median forward P/E and 35% above its median forward P/S. Meanwhile, value stocks like Citigroup are trading at a discount of nearly the same magnitude. So while I don't expect a huge, broad correction in the next couple months given the strength of economic data, we might be due for a rotation from growth to value as seasonality puts investors a little more on the defensive.
When you drill down into the economic numbers, they certainly support a rotation. Consider this week's releases of August PMI data. The manufacturing sector looked hot, with some of its highest readings in 2-3 years. Also showing strong growth were leisure and entertainment, healthcare, utilities, and financials. Meanwhile, the tech sector is still growing, but its growth slowed in August. The construction sector also shows signs of slowing down, with mortgage applications, real estate transactions, and lumber prices all down this week. Now that Russia has a working Covid-19 vaccine and the US is close to a vaccine as well, the work-from-home bubble may begin to burst. State economies are reopening, a good sign for the brick-and-mortar businesses most hurt by the pandemic; a less-good sign for e-commerce and big tech.
On the chart, you can see how the equal weight S&P 500 has been oscillating in a range relative to the cap weighted S&P 500 . In the last three days, it began an upward oscillation. It still has room to run, and I expect a move upward to at least my first target. More likely, this will prove to be an even larger oscillation. I am thinking it runs to Target 2, pulls back to Target 1, and then follows through with a move up to Target 3. In this scenario, I'd look for Target 3 by maybe the end of September.
The small cap : S&P 500 ratio tends to oscillate in a range as well, and it too has begun an upward oscillation (albeit with a little less conviction than equal weights). I expect the peak of the upward move in this ratio to coincide with the peak of the upward move in the equal weight : cap weighted S&P 500 ratio.
Now, keep in mind that these are ratios. Just because RSP and IWM outperform relative to SPY doesn't mean that they go up in absolute terms. As with the last few days, they may instead sell off, but just fall more slowly than SPY . Personally, though, I'm bullish enough on the overall economic data that I want to maintain some market exposure right now. I'm doing so through equal weight funds and carefully chosen mid-cap value stock picking, particularly in sectors like industrials , financials, and utilities.
Energy finally finds support /FibonacciAfter a long period of consolidation, energy broke-down of the parallel channel. Using Fibonacci retracement tools, we retraced from the 61.8% level, also known as the Golden Ratio.
It is currently trying to break its 10sma resistance (on average intraday volume - which is not great)
I would want to see a close above the 50% retracement level to feel more confident, as rotations have not lasted more than 1-2 weeks.
Keeping on a watchlist.
From Stonks to Bonds: ES->ZNThis is another relatively simple idea. As we are at the end of July we can start to take a closer look at monthly charts.
1. August has finished down (open to close) 60% of the time (12 of the last 20 years).
2. Coming into major multiyear trend lines, August seems to have been pivotal... literally.
- August 2007 dropped and pierced support but closed above the trend line providing the last bounce before breaking the uptrend a few months later in November 2007.
- August 2015 opened below the trend line, tried to stay above but ultimately collapsed.
- August 2020? Well here we are in the last week of July retracing the break of the trend line from back in February 2020. With point 1 above and where we currently are in relation to this trend line, this will be important to watch this week. A close at or below the trend line is bearish and this ought to sell off for the next few months. A close above will indicate a bit more of a neutral to bearish stance.
So what exactly does this all mean?
- Simply put a rotation from stocks to bonds.
How to interpret this:
- When this chart goes up, the e-mini SP500 futures will outperform the 10 year note futures.
- When this chart goes down, the 10 year note futures will outperform the e-mini SP500 futures.
Outperforming isn't what you think...
How one of these can outperform the other is:
a. One goes up more than the other.
a. One goes up while the other stays flat.
c. One goes down less than the other - aka one sucks less than the other.
d. One goes up and the other goes down (typically unlikely but still possible).
How to play this:
In order to accurately play the situation described above, there would be a simultaneous short position in ES1! and a long position in ZN1! in equal weight (notional value of the contracts).
In relation to outperforming:
a. The ZN1! long will make more than the ES1! short would lose.
b. Same thing as 'a'.
c. The ES1! short would make more than the ZN1! long would lose.
d. The best scenario, ES1! short makes money at the same time the ZN1! long makes money.
Study of Sector Rotation During 2020 Market CrashFor Growth Investors, there were a few shocking days over the past months where the indexes went up but our portfolios went sideways or down. There's no worse feeling than having the market go up and have your portfolio go down.
The cause was sector rotations as investors moved into "discounted" stocks that were hit the worst during the market crash of 2020 and hopes were they would recover sharply. This chart is a visual history of the last several months and confirmation of the rotations occurrences.
I'm using Select Sector SPDR ETFs: XLK, XLY, XLV, XLC, XLB, XLP, XLRE, XLU, XLI, XLF, XLE. The base chart is a composite price index of all the ETFs listed. The other lines are % change comparison of each ETF starting just before the market made all-time highs and then turning downward.
Please post in the comments if you see other insights in the chart.
Here's hoping for a continued recovery and a safer world over the rest of 2020.
