Highlights from The Weekender
Technology is on false breakout alert after crashing through all short-term support levels.
Defensive leadership is the last thing bulls want to see right now.
Good morning,
Futures are pushing higher this morning, led by the Nasdaq, as tech stocks attempt to bounce back from an ugly week.
The title for last Saturday’s edition of The Weekender was “Breakout or fake-out?” and last week was a big point for Team Fake-Out.
The driver, of course, was technology, a sector I’ve been pointing to recently as an opportunity, and one we increased in recent model trades at the beginning of October.
While I’ve been skeptical of memory stocks, anything related to AI or that had done well recently was thrown out with the bathwater last week, and we need to respect the change in character. The winners and stocks that were firming up before might be “potential” opportunities, but they’re falling knives as we start this week.
The other thing investors need to balance is that the recently improved breadth is coming with defensive leadership. We’ll use this week’s Overtime and Stock Trends reports to continue to monitor, but I would consider it a net negative for the market as a whole.
Remember, if “bad breadth” wasn’t enough to drag the index lower, “good breadth” may not be able to hold it up if technology is falling.
Finally, while some of the oil charts in the latest edition of The Weekender were meant to be extreme and only highlight the potential upside, the fact is that no sector is working better and you likely don’t have enough energy exposure.
