Friday’s price action was not ideal as volume jumped as losses grew. The NASDAQ 100 led the decline as measured by QQQ. For once, the decline was not led by IWM. Volume was higher across the board as institutions continue to sell stocks. We continue to have a choppy market and one will likely remain so for the next few weeks. DIA held up the best out of the major index ETFs. Utilities continue to be the winning sector. Whether it is a flight to safety or hunting for yield XLU has been in an uptrend for quite some time. It proves you do not need to care about the why. Simply focusing in on price is all you need to do to find winners. We remain in a very difficult trading environment and we will continue to hammer home the need to control risk.
In terms of seasonality we continue to be in a weak period. The last week of September is historically bad and this year we followed suit. October is another month where we can see issues. Some of the worse corrections and even stock market crashes have happened in the month of October. This does not mean we will automatically see a correction or crash this month. We are not in the prediction business. Our sole focus is to remain in strength and while we see very little of it now our situation can change. Stay focused and discipline executing in this market. Everything else other than price and risk management is noise.
Cryptocurrencies have had a rough go as of late. BTCUSD was holding up, but finally succumbed to selling pressure two weeks ago and continues to witness selling pressure. We are not going to write about the pros and cons of cryptocurrency. Price action is weak and likely to remain that way. If you want to argue the end of the world edge case it isn’t our cup of tea. GLD and SLV are volatile as well but are holding their respective 50-day moving averages.
FB, AMZN, and NFLX are in decline. The former darlings of the stock market have now fallen. Did money managers over allocate into large cap growth stocks seen in the QQQ? Perhaps, but what we do know is these three are in downtrends. AAPL and GOOGL are hanging in there, but their partners in crime are in some serious trouble for those still holding onto these names. Even MSFT is holding up and has been a name few speak about but has been a steady climber. We prefer to focus in on names with bigger potential to move rather than slow and steady. When a trend reverses it is best to identify and refocus on strength.
We hope you had a great weekend and are ready for this week. There is no question we are ready.
