We got continuation from December's selling to hit the tape this week. Monday we gapped higher and closed well with semiconductor's launching on the back of the CES Event, only to be slammed lower Tuesday. Friday's jobs report came in very strong, which sent rates soaring and had Bank of America predict the Fed won't raise rates again this year which ultimately sent stocks lower. Every single sector closed below its 50 day moving average. We remain in this down cycle which means we should be less aggressive and very selective with any risk we do take.
There are a bunch of charts out there decoupling from the broad market's weakness. It's always imperative to find the best and strongest charts while the market's selling off because they will undoubtedly be the market leaders when the market's ready to turn back to the upside. The major question now remains when will that turnaround come?
I am doing very little until we get some confirmation of a turnaround. The market just broke down and the bears are clearly in control. Rates along with the dollar are soaring, which is weighing on stocks. We don't need to be heroes in a difficult tape, we need to take advantage of the atmosphere when everything is on our side.
PPI Tuesday morning followed by CPI Wednesday morning are the big economic data points this week to look out for. We also have manufacturing data Wednesday along with jobless claims thursday and housing data Friday. The market has been paying close attention to the economic data drops in this selloff.
Earnings season kicks off the latter half of the week. We always do our best with post-earnings setups, be sure to start compiling those watchlists of the best acting stocks.
While there are setups galore in this report, the market closed at a huge support level and could easily continue lower, which would cause the likelihood of long setups working to greatly decrease. Any trades I do take this week will be with half risk, knowing the backdrop is a highly volatile one.
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