“The future is already here — it’s just not evenly distributed.”
— William Gibson
For the full dashboard, please click on ‘Download’ below:
Just two, three charts today after yesterday’s massive rally on (US) equity markets, but a (I think) nice trading idea in the Chart-of-the-Day section.
For some reason, investors decided to interpret all news positively yesterday pushing the S&P 500 out of its consolidation period of the past weeks:
The final confirmation would be reaching a new all-time high (ATH), which is only some 30 index points away. But note, the mini-futures version of the index has already achieved that feat:
Participation was broad(ish), with three stocks up for every stock down, but the heatmap reveals that this was mostly a tech/communication stocks rally:
Which is also reflected in the nearly three percent jump in the Nasdaq then:
Hence, we need to see some follow-through the rest of this week, plus also a broadening out to other sectors.
Perils to the rally are manifold, with
Fed governors being given microphones this week to comment on last week’s hike,
the Iran war sounding closer to re-escalation than resolution,
US stocks being in buyback-blackout period,
and Trump and Xi meeting later this week (Sep 23–25).
Stay tuned …
The following chart shows relative 100-day price returns for the group (using the XLI ETF as a proxy) versus the S&P 500 from 2010 to the present. When the blue line is above/below the x axis, Industrials have out-/underperformed by the number of percentage points shown on the y axis.
In other words, the probability of industrial stocks (XLE) to further underperform the S&P 500 (SPY) are low and there is a good chance for a relative outperformance.
I would consider the First Trust RBA American Industrial Renaissance ETF (AIRR) to express that trade.
Being down 30% since it late June all-time high,
it seems to offer an interesting entry opportunity given the long-term context of this correction:
These are some of the top holdings in the ETF:
Probably not your household names.
Trump and Xi are meeting later this week, but before some of the FOMC-boys and gals are feeling the urge to talk. Let’s see what they have to comment regarding last week’s hike:
May the Trend be with You!
André
Everything in this document is for educational purposes only (FEPO)
Nothing in this document should be considered investment advice
Investing real money can be costly; don’t do stupid shit
Leave politics at the door—markets don’t care.
Past performance is hopefully no indication of future performance
The views expressed in this document may differ from the views published by NPB Neue Privat Bank AG