Days like Monday are bittersweet. It’s great fun watching one’s account value roar higher [if you're shorting], but at the same time, you know it’s going to be all over way too soon, and things will get dull and listless again. It takes a lot of patience to finally wallow around in a day like this. Now we have to deal with the stupid bounceback.
Let’s look at ETFs to get the lay of the land. The Dow 30, via the SPDR® Dow Jones Industrial Average ETF Trust (NYSE:DIA), is still rangebound.
Its brother, iShares Transportation Average ETF (NYSE:IYT) however, the Transports fund, has completed a huge topping pattern. So, yeah, put a fork in it.
Of course, the only asset gaining value yesterday was bonds, below, via iShares 20+ Year Treasury Bond ETF (NASDAQ:TLT), and on huge volume. I have been pointing out the change in trend for many weeks, but I had no hope that we would absolutely pole-vault over the trendline. The 40 year bull market in bonds is clearly intact, because The Fed Has No Alternative.
Thus, with interest rates crumbling away, the banks, via SPDR® S&P Bank ETF (NYSE:KBE), below, have also completed a monstrous top. And I can’t think of any group on the planet more deserving of plunging stock prices than the banks.
This is reflected in the Financial Select Sector SPDR® Fund (NYSE:XLF) too, of course, although it’s going to take a failure of that lower horizontal to really light this bottle rocket.
The biggest loser yesterday, as you know, was oil, via United States Oil Fund, LP (NYSE:USO), below, which got totally firebombed with the OPEC+ announcement. It might bounce, and bounce big, but the die is cast. That horizontal line is going to be a lead wall.
And the same words apply to the energy stocks, via Energy Select Sector SPDR® Fund (NYSE:XLE).
Materials, via Materials Select Sector SPDR® Fund (NYSE:XLB), have the same well-formed price gap that just about every other financial instrument in the universe received yesterday. This will be a vital demarcation for short positions.
One of my (many) positions is puts on the iShares MSCI EAFE ETF (NYSE:EFA), but the gap is meaningless here, since, as an overseas underlying, almost every single day is a gap.
Perhaps the most important chart of all is the small caps, via iShares Russell 2000 ETF (NYSE:IWM), which reached the lower echelon of its 2021 range on Monday, and on hearty volume.
Gold got beaten down early in the session, but to its credit, SPDR® Gold Shares (NYSE:GLD) held its own quite well. C’mon, gold! You can do this!
Next week there's an absolute tidal wave of tech learnings, which should help inform Invesco QQQ Trust (NASDAQ:QQQ) direction. As for now, the short-term trendline is broken.
Finally, the MidCaps, via SPDR® S&P MIDCAP 400 ETF Trust (NYSE:MDY), finished up a squeaky-clean right triangle pattern.
I hope you folks had a profitable Monday. Just to say once again, I exited my short-term positions early Monday, but I am steadfast in all my others, bounce or no bounce.