SEMIS/SOFTWARE/OIL/YIELDS
On September 8th, we wrote this:
“Nothing is 100% sure especially in this noisy, news driven environment emanating from the farce of DC and we mean farce, but on Friday, it seems the down and out SEMIS/AI trade woke up and at the very least, captured some decent relative strength versus the market. It has been a while. To be sure, many names are toast, down 30, 40, 50%+. Something that bounces 20% after being down 50% is still down 40%. But this morning, more of the same. The DOW down 350+ as we write this while the SEMIS/AI, not only completely ignore, but are getting juiced again.”
And then…this past Monday gapped the heck out of the semis to the downside on news from the mucky mucks of AI. We thought, oh well, WRONG! Well, whatever they said, so far, market does not believe as the semis shrugged that day off and now headed north yesterday, moving above some important resistance. Of course, it will need to stick. But yesterday was compelling. This enabled the NASDAQ/NDX to have a very strong day. Let’s hope this continues. Also have to add that SOFTWARE remains in focus with a narrow list of SECURITY names and a few others on the strong side.
WATCH YIELDS! How many times do we need to state that. The good news? That 5% 10 year yield has been rebuffed…so far. Let’s hope it continues. Technically, yields had become stretched even more than the past couple of times they were stretched and each time pulled back. It doesn’t hurt that we believe the treasury that thinks they are the house, is in there using our tax dollars to buy the long end up. Do not forget that every dime they use is our dime. Do not be fooled.
Of course, WATCH OIL. OIL also looks to have topped for now as another “annihilation” threat looks to have been put off.
There has been a direct correlation between the crappy broad market and higher yields and oil. If they stop going up and continue with some downside, expect the broad market to get better. Just know that better means bounce. Not so sure it would be off to the races.