This Week in Stocks — June 6-10
This week, major market indexes seemed to hold a range for the majority of the week. Then, Thursday, seemingly anticipating CPI numbers, the market showed weakness, with Friday after inflation came out higher than expected, markets tanked near previous lows on the highest volume after what has been a very low volume few weeks.
We are now back down below all moving averages, however, the SPY is still above the COVID low VWAP.
I am personally in 99.99% cash and only taking a few trades here and there to keep my head in the game.
BTCUSD — Bitcoin is in a precarious spot, couldn’t rally above 50 day/COVID vwap and is sitting at support. If this weakens past support, there is a large gap that price could slice through. However, support has been very strong here. Will be interesting to watch what happens here.
QQQ Slow and Fast Moving Averages
Here are the QQQ slow (white) and fast (blue) moving averages (weekly). Downtrend still strong. Probably pretty obvious at this point.
Advance/Decline line seemed to follow the market this week, nothing really telling here.
Stocks Above/Below Moving Averages — 6157 Total Stocks
1586 stocks above 50 day sma (25%)
4571 stocks below 50 day sma (75%)
1257 stocks above 200 day sma (20%)
4900 stocks below 200 day sma (80%)
Next week I will start posting the change % from previous week.
52 Week Lows/52 Week Highs
Trending back up.
Trending back upwards. The white dashed line is where I say we are getting into a capitulatory or extreme movement.
Solar ETF (TAN) is still showing strength. Even though it took a hit this week, it’s still sitting in a strong trend after a double bottom. We will see if this continues to trend up with strength over the next few weeks after this potential pullback.
Nearing 200 day and if it breaks above and holds that would be really strong.
Lithium ETF (LIT) — Still looks like it could be holding up nicely. The next few weeks will be telling but still above 50 day sma.
Healthcare ETF (XLV) has been in a flat trend through this downtrending market, it is at a key level, if it can hold that would be promising.
Energy (XLE) is still in a strong uptrend despite end of the week weakness here.
Oil and Gas Exploration (XOP) still continues to chug higher.
Utilities (XLU) in a slight uptrend channel.
China ETF (GXC) moved higher above its 50 day sma this week. Is this a new uptrend? This is a very interesting sector to watch.
Insurance (KIE) holding a flat trend.
Materials (XLB) holding a flat trend.
The rest of the market is getting pummeled.
Final Thoughts — The Energy Trade
I have considered getting into energy for a while, but I have avoided it. Here is why I think energy is going to top out. I could be wrong (obviously), but I think the risk reward isn’t worth it here.
#1 — Crowded and Obvious
First of all. Everyone thinks energy is a safe trade right now. Where things are crowded and safe, people get skittish and big money starts to pull out. We may be getting close to a top, or we may continue higher, but it seems everyone is talking about energy, because it’s the only safe place to go, which makes it ripe for a fall, or at least a short-medium term shakeout.
#2 — Planned Stagnation
Why do tech companies go up and go up fast? Because of expansion. However, because of politics and past burns that still haven’t healed, energy companies are planning NOT to expand. So, they will buy shares and remove the supply of shares, which will look good on paper, but as far as sales growth, the only thing that will move sales growth higher will be higher prices.
If prices stay the same, or even in this range, sales will flatten out, and then earnings will flatten out, and then stock prices will fall. If companies are not expanding supply, then we are not investing in a growth story, we are investing in a stagnation story, and when the market figures that out prices will collapse.
#3 — The Fed
What do we think that there is going to be a safe place for money to hide while the fed takes so much liquidity out of the system? I wouldn’t bet on it. We really don’t know how vast the impact of the new fed policies will be, and any investments right now are a roll of the dice against the fed. I prefer to wait at this point.
If I was already in energy, definitely makes sense to hold until something materially changes in the stock movement. However, I don’t know that I would be adding or looking for entries here.
Good luck out there!