It looks like I picked a good week to be on vacation! Last week's newsletter hammered home the underlying weakness in the 'risk-on' stocks such as the nasdaq and tech stocks. After a fake out move higher Tuesday, stocks met their maker Thursday with the second biggest down day of the year. You know it's been a good year when a 1.4% down day has people wondering if it's time to get short. Not so fast there Sparky!
The SPY is testing trendline support that has been pretty relevant this whole year -- so the $246 area is the first spot to watch. One look at the SPY weekly chart (2 down) and you can see the major uptrend is still VERY much in tact. We have been going virtually straight up this year so this action is healthy.
We may be moving to a bit of a headline driven market with all the Geopolitical News coming out of North Korea, so it will be interesting to see how the market reacts to these events going forward.