Good morning,
Today, we’re breaking down the technicals for our most important risk baskets.
As Saturday’s edition of The Weekender showed, since the middle of August, there’s been a clear move toward defensive leadership. Given we’ve already seen weakness in breadth and credit, this is really the last thing bulls want at this point, so it’s important enough that we’ll be devoting this report and Thursday’s Stock Trends to it.
In today’s report, we’ll look at the absolute technicals for all of our key risk baskets, and then end with some of the most important relative relationships.
Let’s get into it!
💡Quick reminder on the S&B 20 baskets💡
The S&B 20 Index is my custom index that I use to help gauge the health of the market. It’s a small, concentrated index with exposure carefully selected from key groups. They are:
Top Tech 8: Apple, Amazon, Broadcom, Alphabet, Meta Platforms, Microsoft, Netflix, Nvidia
Cyclicals: Booking Holdings, D.R. Horton, JPMorgan & Chase, Simon Property Group, Uber, United Rentals
Defensives: Berkshire Hathaway, Duke Energy, Eli Lilly, Procter & Gamble, UnitedHealth Group, Exxon Mobil
We’ll review all 20 in Thursday’s Stock Trends.
Risk-on baskets: Tech-heavy
S&B 20 Top Tech 8
The Top Tech 8 is a generally constructive chart, above a rising 200-DMA and with big base potential. The two major negatives are that the index is actually below last October’s peak, and failed to make a new high like the S&P 500 last week.
*Note that the S&B 20 baskets aren’t candlesticks because they are geometrically weighted. This keeps the index weights constant.
High beta (SPHB currently 51% technology)
High beta failed to make a new high earlier this month and is back toward the lower end of a 14% range. The relative breakdown vs. SPX isn’t a great signal, but the bigger concern would come from a move below $134. That would complete a double-top and target considerable downside.
Momentum (MTUM currently 49% technology)
