Market Review 22.09.04
The pinball machine
Hello everyone,
Selling continued this week in most parts of the market. Let’s assess the damage and see if there are any opportunities worth pursuing in this tricky tape.
The Pinball Market
In June, we looked at how a lot of diverse sectors hit major long-term support levels. From there, we got a decent rally. But that rally stalled in Aug at some key resistance levels.
For example, here’s VEU (All-world ex-US ETF) getting rejected at the former 2018-2020 highs.
And here’s AMZN and NFLX getting stopped at former support.
So, what now?
Few places to hide
ETF leadership currently looks like this:
It’s no surprise that the weakest parts of the market are making fresh breakdowns. Here’s the SOCL ETF.
ARKK just made fresh new lows relative to QQQ.
But even the leaders over the past year (oil stocks) aren’t providing very promising setups here. We have many names running into major resistance (eg. OXY) while many others are failing to hold breakouts (eg. TRP, DBE).
Even the relatively stable Big Pharma ETF broke down this week.
There’s very few places to generate profit in this volatile market. But here’s some stuff I’m eyeing…
Bright spots
While SPX has been down each of the past 2 weeks, uranium stocks have been up. Only a very few other areas have achieved this, including the US dollar. Not only has uranium been up, but here’s CCJ breaking out of an important 1-year range.
I’ve talked about the leadership in waste removal stocks for months now. Here’s WM approaching a retest of this beautiful 1-year base.
Gold stocks have some of the weakest momentum in this entire market. But here’s WPM hitting major 11yr support.
In addition, Commercial hedgers have their largest net long positions in precious metals futures dating back 4 years.
Still, the trend for gold miners remains down. For me to get interested in this space, I want to see GDX:SPX (as well as individual miners) first recover broken support:
Failed breakdowns can get us in new trends early. Justin says it well:
Closing Notes
Trade ideas are few and far between. In this choppy market, patience is key. Greg Rieben is bang-on with his tweet:
A few trades ideas were presented above. However, having a decent allocation to money market funds makes sense given that they’re paying near 3% with no interest rate risk.
In Canada, we have convenient money market ETFs listed on the TSX with good liquidity. This includes:
CI High Interest Savings ETF (CSAV)
Horizons High Interest Savings ETF (CASH)
Horizon USD Cash Maximizer ETF (HSUV.U)
All these hold their assets with the big-5 Canadian chartered banks (very low credit risk). HSUV is for US dollar accounts. It’s tax efficient as it reinvests interest earned (no distributions made).
Enjoy the rest of your weekend.
Twitter: @alphacharts.
Important Disclaimer:Â This blog is for educational purposes only. I am not a financial advisor and nothing I post is investment advice. The securities I discuss are considered highly risky so do your own due diligence.