Hopefully you have noted that my scenario for the week has been playing out exactly… that is lower early in the week, lower low on Tuesday, then rally into the end of week … so far bang on! One interesting thing also playing out that I did not expect is that the most important stocks … AAPL, GOOG, MSFT, NVDA, AMD, AMZN, TSLA have performed far better than the general market averages. See chart GOOGLE on left, S&P 500 on right.
Since these names constitute most of the weight in the general averages, it tells us all the lesser name stocks have performed so poorly that they have dragged down the averages despite the strength in the big names. So what is that telling us? To my mind, it is bullish. May not be bullish immediately, and I could see a scenario with a lower low next week, but I think it’s late in the day to be bearish. The secondary stocks get sold out, the leaders gather strength for another run. If and when we get another move lower, look to GOOG, MSFT, NVDA. I do think if we get the next leg down it will likely set up a buy opportunity. I do NOT see a crash on the horizon. However, neither am I getting long here just yet. The big stocks are sending a big message and it’s not bearish. Be patient with me and wait for a clean buy set up.