Keith Schneider | Aug 23, 2021 12:11AM ET
Markets continue to chop during this seasonally weak period and have made no progress over the past 30 days. Price patterns of the key US Equity indexes are holding up at key moving averages, but there are signs of stress that should not be ignored.
Small Caps (Grandpa Russell: IWM) which represent the broadest measure of the US economy touched the lowest levels of a 7-month trading range, and was down almost 2% for the week.
Other signs of stress include poor momentum readings, weak Risk Gauges, rising Hindenburg Omen levels (see chart below and weekly highlights for details), and sector rotation showing risk off as utilities (XLU) hit new all-time highs.
Meanwhile, short term, equities are mean reverting, bouncing off oversold conditions and key moving averages. This could offer an opportunity to take some money off the table at higher levels and/or tighten stops if last week’s lows are violated.
On a more positive note, growth stocks are holding firm relative to safer value plays which is why the big picture is muddy at best.
If you’re looking for a way to identify the stocks and sectors that are most likely to explode higher (some already have, e.g., MSFT, ADBE, CSCO, NVDA, and more), after last week’s mini-correction.
h2 The Week’s Market Highlights/h2
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