Charts mentioned are located here http://stockcharts.com/public/1229503/tenpp
I am getting a feeling that some sort of a “flight to safety” is taking place within the markets. Of the major ETFs two gainers stood out: bonds (TLT) and utilities (XLU). These assets are the traditional go-to during the time of market stress. On average stocks ($SPX) lost a little over 1% for the week – not much of a concern for me at this point.
QQQ is holding up better then the rest of the major ETFs, even though it is retesting its prior breakout for the second time in as many weeks. Volume pattern for QQQ is suggesting we may see some lower prices ahead first, before the uptrend resumes. Market breadth is still lagging for QQQ.
Similar story on another high volatility ETF named HACK. This ETF holds a basket of various cyber-security stocks. It too lost over 13% from its peak in late June. HACK is at support from July 7 lows – a logical place to regain its footing and push higher.
Utilities and REITs are sectors that traditionally benefit from the low interest rates. Since bonds are gaining, interest rates are dropping again. XLU gained almost 1% for the week and managed to close above the 200-day moving average – something it hasn’t been able to do since late May. Same as bonds, utilities are the defensive assets that investors rotate into during the time of stress and stock market uncertainty.
Best Regards and have another great trading week!
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