Good morning,
Full disclosure: I am writing this intro from a place of frustration.
My wife is out of town this weekend and I’ve got the kids, so I was getting an extra head start on the report and had the outline fully done before lunchtime on Friday.
The title was: Finally, a crack.
Well, by Friday afternoon, it was clear that crack was in a dam and the whole damn dam had given way.
As Tyler Childers sings, “Where we gonna go when the dam breaks loose?”
Well, apparently not into gold or Bitcoin.
But I won’t sugarcoat my thoughts:
I think we’ve entered a correction.
Now, if you’ve been following along, you know I haven’t liked this market for a while, and have been negative on the semiconductor/memory trade. I thought it was the top three weeks ago, and it wasn’t.
But there’s simply no technical bull case for those stocks after last week’s action, and while I always caution betting against trends, if there was ever a time to go underweight tech stocks tactically, it is now.
As for the rest of the market, last week’s callout that a strong jobs report represented a material risk turned out to be right. 10s held support and spiked, 2s soared to a 52-week high, and Fed fund futures traders pulled a hike up into this year.
None of that bodes well for a market that ex-technology hasn’t done anything in four months, though things were historically “not that bad” under the surface on Friday, as today’s report will show.
The last thing I’ll say is that I know you’re all itching to know “the level” we might trade to. But remember, correction bottoms are about market internals, not about getting to some magic level. I’ll highlight some “levels of interest,” of course, but the mindset going into this week is: The path of least resistance is lower, and we believe that until we start to see breadth and sentiment get flushed.
This week’s report will review:
The end of the semiconductor/tech run
The problem with the rotation trade
Rates following the jobs report
Major index technicals
Other ETF movers
IPO fever
and more!
