Momentum Monday – We Got A Bleeder…

Last week I wrote about ‘Feeding The Ducks’ (booking some profits). Things were perfect.

This morning we are seeing a pretty big selloff.

Ivanhoff has a good riff:

The new earnings season coupled with the coronavirus fear mongering is certainly contributing to a choppier tape. As a result, gold and U.S. Treasuries have been rallying. Both can be a good hedge. When the volatility genie escapes the bottle, it is hard to get him back in. A rise in volatility typically begets more volatility, at least in a short-term perspective.

Everyone is looking at the price action of the indexes for a clue if a correction is coming. The problem with this approach is that the indexes are lagging indicators.

The biotech ETF which was among the first ones to break out and lead this rally in October is now among the first ones to break below its 50-day moving average. 89-90 is a huge level for XBI and if it doesn’t hold, we might be in for a lot more volatility.

My friend and favorite market technician JC, who has been very bullish the last few months, turned cautious last week based on certain price action. It is worth a read.

I don’t really care about the reasons, but yes risk started coming off last week and you could see it in Chinese stocks and biotech stocks getting hit hard.

This week all the big tech companies are reporting and we will get a better feel of the strength of the market.

As always, Ivanhoff and I discuss all this and the trends that are still working in this weeks ‘Momentum Monday’ episode. You can watch or listen right here.

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