Sell The Bounce?

Based upon the S&P 500 Index making a new closing high on Friday equities appear constructive, with some sectors doing well while others lag. So buy the dip or sell the bounce? It all depends on the sector. The Market Review explains along with comments about last week's Powell and Yellen remote "Dog and Pony Show".

S&P 500 Index (SPX) 3974.54 advanced 61.44 points or + 1.57% last week after churning up and down until Friday when it bounced up off the 50-day Moving Average to make a new closing high just .42 points above the previous closing high made on March 17. On Thursday, it traded below the 50-day Moving Average but then closed back above it rebounding in a late-day rally. Support at the 50-day Moving Average held once again as the perennial bulls knew it would.

Invesco QQQ Trust (QQQ316.00 added 3.25 points of +1.04% last week but it still closed below the almost flat 50-day Moving Average at 320.61 that halted the attempt to overcome resistance on Monday and Tuesday for the third time. For March with three trading days to go, Technology, Communication Services, and Consumer Discretionary sectors, with many richly valued high-growth stocks, some without earnings, are on the bottom. It appears QQQ and some constituents are being sold as they bounce up with money rotating into cyclicals such as Industrials and Materials along with Utilities considered as a bond alternative with yield and some inflation protection, that's now becoming increasingly important.

CBOE Volatility Index® (VIX) 18.86 dropped 2.09 points or -9.98% last week. Our similar IVolatility Implied Volatility Index Mean, IVXM using four at-the-money options for each expiration period along with our proprietary technique that includes the delta and vega of each option, slid 1.86 points or -11.63% ending the week at 14.13%, and a bullish 52- week low, or a caution sign from a return to the mean perspective around 17%, as shown in the following six-month chart.

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Disclaimer: is not a registered investment adviser and does not offer personalized advice specific to the needs and risk profiles of its readers.Nothing contained in this letter ...

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