Sector Rotation Underway

The story continues to repeat itself and we are getting tired of repeating it; we still lack follow through in this market. Does this mean that bullish hopes have been crushed by today’s setbacks? Maybe, but we don’t think so. Today saw massive amounts of sector rotation. Steels, oil and gold are trading in waterfall-type breakdown patterns while biotechs, the semiconductors, software, and other areas were holding up rather soundly in the face of a retreating market. Likewise, the trend line we provided for the QQQQ this morning, which was overcome by last week’s break, held the downfall. Thus, what we have today is a market which failed to follow through, but that did not break any support levels. It would be unfair to read much more into it than that.