Three key US equity stock indexes (SPY), QQQ), DIA modestly sold off, -1.0% on average while longer-term laggards Small and Mid-Caps (IWM and MDY) improved. Major sector rotation is occurring as we await the outcome of the US elections.
Considering the venomous politics taking place it’s not a big surprise that the dollar is getting hit while our democracy is being questioned.
Meanwhile, at least for the moment, domestically markets don’t seem to care and they are acting mostly bullish.
The highlights of this week’s market action are the following:
- Risk gauges stayed positive
- Volume patterns show institutional distribution in the key equity benchmarks (DIA, SPY, QQQ) with the exception being Small Caps (IWM) which is under accumulation
- US bonds (TLT) sold off hard breaking down under 200 DMA
- Small and Mid-Caps are trading above short-term MA’s and showing life verses the S&P 500
- Value trying hard to make a comeback
- Rotation into Regional Banks, up over 8% for the week
- Transportation and the Retail Sector also performed well
- Market Internals improved with the McClellan Oscillator stabilizing and avoiding a sell signal
- Emerging Markets continued its recent leadership on our daily charts (over both US equities and established foreign markets) with commodity-sensitive countries leading
- Dollar weakness continues, especially against China’s Yuan