No doubt acrobatics, such as the one illustrated, require incredible strength, flexibility and focus.
Only a handful of performers have the skill to pull off a one-armed handstand whilst balancing on a stack of chairs.
Likewise, only a handful of stocks have the strength, flexibility and the focus of investors.
The minority of stocks that do amazing feats of strength and balance have kept the investors bullish and the market robust.
Oddly, with Amazon, Google and Facebook all at new highs, many other sectors of the market hardly look like the “Greatest Show on Earth.”
In fact, many resemble the opposite of acrobatic finesse-precariously balanced, fearful of heights and out of favor with investors.
Which sectors require a net to catch them when they fall?
For me, my macro viewpoint typically follows the trail of the Transportation sector or IYT.
To review, the Dow Theory states that if manufacturing goods exceeds transporting goods, it could be an early warning sign that demand is diminishing while supply increases.
In the long run, that is not a favorable scenario for the economy.
Today’s action is classic.
While online shopping sales increased to its highest levels, that windfall is subdued by the poor brick and mortar retail sales.
Here’s where following IYT gets interesting.
IYT began up on the day. Friday’s high was 174.01. Today’s high 174.00.
From there, IYT (in a warning phase) sold off. It took out 173 or the 17-week exponential moving average. It tested and thus far held, the 100-DMA at 172. 11.
IYT’s decline trickled to the Russell 2000 (IWM.). Super wonder woman Sister Semiconductors (SMH) also declined. SMH could have a topping candle. Only, the volume does not support a strong reversal top.
Meanwhile, Regional Banks (KRE), tried to improve phases to bullish. Neither strong nor dexterous enough, KRE gained yet ultimately closed in the warning phase it began the session in.
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