A solid day for price gains as big cap technology stocks continue to find buyers pushing the market higher. We have almost completely wiped out last Wednesday session. Many were quick to call a top last week as Wednesday’s action was a little concerning. This is where we succeed as we do not let our emotions take over control of our actions. We continue to stay disciplined and avoid the pitfalls of emotional trading. Volume was light on the session, but typical for a Monday. XLU broke out of a recent trading range as buyers found their way into Utilities. Not a group you typically wanting to be a leading sector. Energy was the lagging sector today despite crude oil holding above $50 a barrel. Not a bad way to begin the week. We could wish for more, but we will take what we can get from this market.
Rate hike odds are back up to 100% for the next June meeting. Interesting Utilities would be leading when the Fed is going to hike rates again. Bonds backed up a bit, but perhaps the fear over a market decline has money managers accumulating shares in Utility companies. This market is fascinating, but we really only care about price action. It is too difficult to predict what we might see the market do. Who would have guessed Utilities would be breaking out here knowing another rate hike is coming around the corner?
The VIX has completely done a 180 degree turn as the recover from last Wednesday’s trading session has taken place. We have seen volatility completely collapse until last Wednesday when people panicked over one day of selling. TVIX and UVXY jumped, but now have all been dumped. They are tricky investment vehicles to handle. They probably should not even exist! If you are able to cut your losses quickly with them and take profits you may have a shot. Most likely you will not be able to handle them so it is best to stay far away from these ETFs.
Today was a good way to start the week. We wish you a great week!
