I really want to buy the market, but I’m looking for a reason, and I can’t seem to quite see it.
Don’t get me wrong, I don’t think the market needs to collapse from a technical perspective, but I don’t think it needs to go back to highs. At least, I don’t think it needs to go back to highs, yet.
Let me explain a bit further. I’m always looking for a leading indicator for the markets to go higher. For years, that market leader has been the technology sector. Well, when the market (the S&P 500) was at recent highs, the tech sector (the NASDAQ 100) was lagging the move. And people could understand it, because interest rates were projected to rise due to inflation and so money wasn’t as cheap which meant investment in tech companies was more expensive, so tech lagged a bit. It made sense.
Let’s look at the charts for the S&P 500 and NASDAQ 100 now:
So, we saw the lag on the way up. Then, we saw both the broad market and the tech sector try to hold at the 50-Day Moving Average and fail. That’s a bit tough to justify buying. But, even more alarming, is that the leading indicator for tech is failing much worse. Semiconductors have traditionally been the leader for tech, and they are falling to 6-month lows as we speak, as we see the semiconductor ETF test the lows from March 14th:
Given this, I’m struggling to justify buying the market. When I see semiconductors find their footing, I’ll have an easier time buying. Maybe this is a double-bottom, and it’s time to buy. If we see a higher high and higher low today, that could be the start of something. But for now, it’s better for me to wait for a signal than to try to catch that proverbial falling knife.
While the VIX isn’t necessarily in panic mode, and neither tech nor the broad market are in panic mode, there’s some dangerous red flags coming from the semiconductor sector right now that mean I need to either look for some bearish bets if semiconductors make a new low or simply hold off on the buy side, at least for now.
So, please go to https://optionhotline.com to review how I traditionally apply technical signals and probability analysis to my options trades. As always, if you have any questions, never hesitate to reach out.
See Related Articles on TradeWinsDaily.com
Auto-trading, or any broker or advisor-directed type of trading, is not supported or endorsed by TradeWins. For additional information on auto-trading, you may visit the SEC’s website: All About Auto-Trading, https://www.sec.gov/
TradeWins does not recommend or refer subscribers to broker-dealers. You should perform your own due diligence with respect to satisfactory broker-dealers and whether to open a brokerage account. You should always consult with your own professional advisers regarding equities and options on equities trading.
1. The information provided by the newsletters, trading, training and educational products related to various markets (collectively referred to as the “Services”) is not customized or personalized to any particular risk profile or tolerance. Nor is the information published by TradeWins Publishing (“TradeWins”) a customized or personalized recommendation to buy, sell, hold, or invest in particular financial products. The Services are intended to supplement your own research and analysis.
2. TradeWins’ Services are not a solicitation or offer to buy or sell any financial products, and the Services are not intended to provide money management advice or services.
3. Past performance is not necessarily indicative of future results. Trading and investing involve substantial risk. Trading on margin carries a high level of risk, and may not be suitable for all investors. Other than the refund policy detailed elsewhere, TradeWins does not make any guarantee or other promise as to any results that may be obtained from using the Services. No person subscribing for the Services (“Subscriber”) should make any investment decision without first consulting his or her own personal financial adviser, broker or consultant. TradeWins disclaims any and all liability in the event anything contained in the Services proves to be inaccurate, incomplete or unreliable, or results in any investment or other loss by a Subscriber.
4. You should trade or invest only “risk capital” money you can afford to lose. Trading stocks and stock options involves high risk and you can lose the entire principal amount invested or more.
5. All investments carry risk and all trading decisions made by a person remain the responsibility of that person. There is no guarantee that systems, indicators, or trading signals will result in profits or that they will not produce losses. Subscribers should fully understand all risks associated with any kind of trading or investing before engaging in such activities.
6. Some profit examples are based on hypothetical or simulated trading. This means the trades are not actual trades and instead are hypothetical trades based on real market prices at the time the recommendation is disseminated. No actual money is invested, nor are any trades executed. Hypothetical or simulated performance is not necessarily indicative of future results. Hypothetical performance results have many inherent limitations, some of which are described below. Also, the hypothetical results do not include the costs of subscriptions, commissions, or other fees. Because the trades underlying these examples have not actually been executed, the results may understate or overstate the impact of certain market factors, such as lack of liquidity. Simulated trading services in general are also designed with the benefit of hindsight, which may not be relevant to actual trading. In addition, hypothetical trading does not involve financial risk, and no hypothetical trading record can completely account for the impact of financial risk of actual trading. TradeWins makes no representations or warranties that any account will or is likely to achieve profits similar to those shown.
7. No representation is being made that you will achieve profits or the same results as any person providing testimonial. No representation is being made that any person providing a testimonial is likely to continue to experience profitable trading after the date on which the testimonial was provided, and in fact the person providing the testimonial may have experienced losses.
8. The author experiences are not typical. The author is an experienced investor and your results will vary depending on risk tolerance, amount of risk capital utilized, size of trading position and other factors. Certain Subscribers may modify the author methods, or modify or ignore the rules or risk parameters, and any such actions are taken entirely at the Subscriber’s own election and for the Subscriber’s own risk.