Last week, we wrote this:
The market is oversold on a near-term basis but oversold can get more oversold. (We are hearing China eased again over the weekend !). Leave no doubt that the ice got even thinner last week. Many are calling this a blip. After all, the DOW and S&P are only down a few percent off their highs…but they are not telling you that underneath the surface of the DOW and S&P, the action is much worse.
We just go slower here. We also get excited. Why? It is in the corrections that the cream rises to the top. It is in the corrections that it is easiest to isolate the strength. If this is nothing more than a correction of unknown price and time, ultimately, the relative strength will show up. Just know as we head into earnings season, markets look like it needs some more price and time.
The only areas emerging are ENERGY areas as prices have moved out to new highs. After that, not much new. On the other end, we continue to watch the SEMIS closely. The SOX remains very wide and loose while trading below the 200 day. There is a decent chance the past few months are tracing out a gigantic top. If that is the case, look out.