A couple of times in the last few weeks I have said, it doesn’t appear there was much to rotate into, in terms of sectors handing off market leadership to continue to drive the market higher. Important to note this doesn’t mean stocks can’t go higher — to state the obvious, literally anything is possible in the stock market— but it does mean the leadership would come from stocks that have already rallied and looking a little extended. This extension can happen once or twice or seven times, which is why this occurrence is not calling for a bearish view, but rather just a cautious view. Of course the more times the market extends without rotation or without a pullback, statistically the closer and higher probability a pullback does become. And that is about how I see the market right now.
I am prepared to trade either side. On Friday I used the early rally to put on a short position in Nike (NKE) as discussed last week. In the attached chart the 104 area has been a big level, tried many times, and it looks like the market is storing energy in a tight coil to break lower below 104 in Nike. I am also short Micron (MU) on Friday’s rally.
On the long side watching 102 in AMD. And Apple (AAPL) has support in the 178 ish area. If either of these zones are touched I will be looking to get long on any entry trigger I have.