I know from firsthand experience that riptides are powerful... As a surfer in my teens, I was carried more than 45 blocks along the New Jersey shoreline while surfing in pre-hurricane conditions before I could get out of the water.
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Pay Attention to the Market's 'Riptide Warnings'
By Pete Carmasino, chief market strategist, Chaikin Analytics
I know from firsthand experience that riptides are powerful...
As a surfer in my teens, I was carried more than 45 blocks along the New Jersey shoreline while surfing in pre-hurricane conditions before I could get out of the water.
What saved me? I didn't fight the tide. I floated on my board along the shoreline and waited it out.
Thankfully, I learned that as a youngster. I was a great swimmer, but no one person is greater than the tides of the ocean.
Lifeguards have a saying along the lines of "riptides don't drown people, people drown in riptides." The undertow is the main thing that makes people panic and start to exhaust themselves swimming.
Overestimating your swimming ability and underestimating the riptide is a recipe for disaster.
The same is true in the markets. What may look like a broadening out of performance can turn into a new trend – a tide – which takes you out to "sea" if you aren't in the right stocks. It's like a "riptide warning."
Thankfully, we have an investing guide here at Chaikin Analytics to help us...
A rare mathematical inversion in ONE corner of the stock market now presents a 1-in-20-year money-making opportunity we may never see again in our lifetime. It has nothing to do with "The Magnificent Seven" or the presidential election... and doesn't involve trading options or bitcoin. Yet, it could create enormous wealth for those who position themselves correctly, beginning today. Click here for full story.
All over the world, vaults are being emptied out by financial insiders. And soon, you may not be able to purchase gold – at ANY PRICE... Period. Forty-year market veteran and former Goldman Sachs Vice President, Dr. David Eifrig, reveals what is happening behind the scenes in the gold market, and what you must do immediately to prepare.
You see, our Power Gauge system doesn't just track fundamentals. It also gives us technical indicators.
And the one I tend to rely on the most is relative strength.
It shows me if a stock or exchange-traded fund ("ETF") is beating the S&P 500 Index. And to track the S&P 500, we use the SPDR S&P 500 Fund (SPY) .
Now, here's the most important thing to remember...
If a stock or fund isn't doing well when SPY is also underperforming, there's a big problem. Not only is that stock or fund going down, it's also down more than the broad market.
This leads me to the recent performance of the Invesco QQQ Trust (QQQ). It's an ETF we can use to track the tech-heavy Nasdaq 100 Index.
Now, I'm not saying that alarms are sounding to "get out of the water" with tech. But right now, I see the makings of a move lower. Take a look at the chart below...
You can see in the red circle that QQQ's relative strength versus the S&P 500 has just turned lower. That's after months of stronger relative strength versus the broad market.
And in the yellow circle, you can see the Power Gauge has just changed from "bullish" to "neutral" on QQQ. That's also after months of a "bullish" rating.
Now, this alone isn't enough to change our overall bullish outlook...
We can see the broader indexes like the S&P 500 and the Russell 3000 are still doing well. And since QQQ is heavily weighted in the large-cap tech stocks, it is weakening. Its top-heavy nature speaks to both its incredible performance in the past year and to the recent move down.
And now, with inflation and interest rates driving market sentiment, technology could be taking a well-deserved breather.
In my next essay on Monday, I'll review the sectors that are now broadening out versus QQQ and the S&P 500 – and what that means for us as investors.
Good investing,
Pete Carmasino
Market View
Major Indexes and Notable Sectors
# Hld: Bullish Neutral Bearish
Dow 30
+1.2%
12
17
1
S&P 500
+0.84%
199
258
40
Nasdaq
+0.34%
41
49
9
Small Caps
+2.18%
577
985
345
Bonds
+0.99%
Utilities
+2.79%
4
22
4
— According to the Chaikin Power Bar, Large Cap stocks remain somewhat more Bullish than Small Cap stocks. Major indexes are all strongly bullish.
* * * *
Sector Tracker
Sector movement over the last 5 days
Utilities
+2.08%
Health Care
+1.55%
Energy
+1.47%
Industrials
+1.23%
Materials
+1.18%
Real Estate
+0.9%
Financial
+0.79%
Discretionary
+0.65%
Staples
+0.37%
Communication
+0.21%
Information Technology
-0.47%
* * * *
Industry Focus
Biotech Services
31
74
13
Over the past 6 months, the Biotech subsector (XBI) has outperformed the S&P 500 by +5.47%. Its Power Bar ratio, which measures future potential, is Strong, with more Bullish than Bearish stocks. It is currently ranked #13 of 21 subsectors.
Top Stocks
MRNA
Moderna, Inc.
NBIX
Neurocrine Bioscienc
UTHR
United Therapeutics
* * * *
Top Movers
Gainers
ENPH
+9.56%
FSLR
+9.33%
CTAS
+8.25%
ALB
+8.23%
NCLH
+5.85%
Losers
ANET
-3.16%
NOW
-2.51%
NFLX
-2.5%
NVDA
-2.5%
SNPS
-1.88%
* * * *
Earnings Report
Reporting Today
Rating
Before Open
After Close
MKC, MSM
WBA
No earnings reporting today.
Earnings Surprises
CCL Carnival Corporation & plc
Q1
$-0.14
Beat by $0.04
CTAS Cintas Corporation
Q3
$3.84
Beat by $0.26
RH RH
Q4
$-0.42
Missed by $-1.51
* * * *
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This work is based on SEC filings, current events, interviews, corporate press releases, and what we've learned as financial journalists. It may contain errors, and you shouldn't make any investment decision based solely on what you read here. It's your money and your responsibility.
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