Techs UnderPerform Market and Could Weigh on QQQ
Big tech misses are weighing on the market as stock futures trade modestly lower after hours. Both Google and Microsoft missed on their revenue estimates. Even though the short-term and long-term trends for the market are up, stocks are overbought after big moves the last 3-4 weeks and these misses may give investors reason to pause. The PerfChart below shows the relative performance for the nine sector SPDRs. Notice that the Technology SPDR (XLK) is the second weakest sector on a relative performance basis. The Basic Materials SPDR (XLB) is the second weakest. Note that this is relative weakness. On an absolute basis, all nine sectors are up since June 21st. This market has been powered by relative strength in the Consumer Discretionary SPDR (XLY) and the Finance SPDR (XLF).
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Charts of Interest: Tuesday and Thursday
This commentary and charts-of-interest are designed to stimulate thinking. This analysis is
not a recommendation to buy, sell, hold or sell short any security (stock ETF or otherwise).
We all need to think for ourselves when it comes to trading our own accounts. First, it is
the only way to really learn. Second, we are the only ones responsible for our decisions.
Think of these charts as food for further analysis. Before making a trade, it is important
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a trigger level, a target area and a stop-loss level. It is also important to plan for three
possible price movements: advance, decline or sideways. Have a plan for all three scenarios
BEFORE making the trade. Consider possible holding times. And finally, look at overall market
conditions and sector/industry performance.
