Are Tired Tech Traders Rotating into the Others?
As tech gets long in the tooth and traders get tired of those same old extended names, are they taking advantage of other market segments?
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The Market
You could feel the lethargy creep into tech today. Oh sure, Marvell was the stock du jour, but for the first time in nine trading days, Nasdaq had more volume trading on the downside than upside. The volume in the QQQ couldn’t even get to 30 million shares. That’s the tiredness I speak of. It’s what I term overbought.
But I was asked a great question today I want to address. This person noticed that some of the non-tech stocks I have recommended of late (he cited Alcoa) have moved quite a bit, yet no one is talking about them. So the question is, if tech can come down, can we get group rotation into stocks like Alcoa?
Why not? I mean, Alcoa is up 20% in two weeks, so despite the fact that I still like it, I am not chasing the stock here. But I would point out that XME, which I liked three weeks ago (before it promptly went down ten percent and came right back), is finally breaking out. There is some trouble from that January spike high at 135, and it’s short-term overbought, but if it dips toward 125-130 and holds over 125-ish, it ought to be okay.
Or another chart I liked this week was Citigroup (C). It’s had a nice couple of days, but since I stink at chasing, let me point you to XLF (XLF), which has been languishing for quite some time in this low 50s area. As long as it doesn’t break that line around 51, it seems to be okay.
Overall, very few of the indicators changed today. The two that did change are the DSI for the VIX is now 13 (The S&P and Nasdaq are still at 80). I call that the yellow zone. That means we are due for a bout of volatility.
The other DSI I would note is Bitcoin. I am not a fan of BTC, as most readers probably know. And I don’t love the chart. I’m not sure there is a lot of hysteria over it, but there certainly is a lot of chatter about the move down. The DSI is 10. So, if you are a BTC fan, it’s probably very close to a bounce.
New Ideas
I was asked about energy stocks last week, and I was nonplussed with the charts. Since then, Chevron (CVX) has come back to support (180-ish) and bounced. So, I would add this to the list of stocks that could rally that are not tech.
Today’s Indicator
The McClellan Summation Index is still not heading up. If we get rotation into the others, it ought to turn back up. If we don’t, it’s problematic.
Q&A/Reader’s Feedback
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Super Micro (SMCI) has the momentum, that’s for sure. But it is just shy of resistance, and that bottom it broke out of measures to the low 50s, so I suspect it stalls out up there (the line comes in around 52-53). A pullback might give me some confidence that a move up and over that line is sustainable, but from right here, I do not have such confidence.
Snowflake (SNOW) ran into resistance, but that’s the worst I can say. Oh, I can say it filled some gaps and is overbought, but again, the stock hasn’t done a thing wrong on this breakout. I cannot chase it because that is not my style. If it has a decent pullback over the next week or so, I might like it for a move back up over that line. Right here, I’d take a little something off the table, but just to book something.
KKR (KKR) is shaping up to be the sort of chart I like. The risk/reward is good since under 90, and I know I am wrong. If we ever get any sort of group rotation away from tech, this chart should improve.
Technically speaking, MAGS (MAGS) has a lower high but no lower low, thus it’s only done one thing wrong so far. If it breaks 67-68, I would start to believe this is a false breakout. Lower highs and lower lows are bearish. One without the other is more of a ‘be careful’ and keep an eye out.
