The SPY is currently set up exactly the same way the XLU was June 1. Take a quick look at the XLU chart to see what could happen to the S&P 500 next. The QQQQ, on the other hand, has been holding up nicely near its highs. This is quite a divergence.
Whether or not the S&P follows the XLU route lower or not depends on how the market decides to interpret the Fed minutes released yesterday afternoon. If the market concludes that a rate cut is imminent, then no doubt the S&P will shrug off the sell signal and march higher. The high level of put buying seems to indicate that this is what will happen.
Meanwhile, good long side set ups can be found in the Automotive, telecom, and semiconductor sectors if you are picky and choosy about what to buy.
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