Another boring week one would say :); if one is bullish and positioned in right sectors.
We saw some changes in leadership this week. Regional banks KBE and India INDA lost it’s leadership and are now in neutral territory, Energy XLE and Russia RSX also under performed this week but managed to stay above water. On the other hand semiconductors XSD, tech XLK and Nasdaq 100 QQQ were Outperforming this week. Clear losers of the week are China FXI, Latin America ILF, Brasil EWZ and emerging markets in general EEM.
It is never easy in stock markets, this is why one must stay vigilant and flexible and be ready to switch positions rapidly.
NYSE Composit Index NYA with 1917 components managed to hold breakout, this speaks about broad participation.
The answer to the question of which sectors an investor should avoid is provided in section Underperforming sectors.
In section Risk ON/Risk OFF environment, I provide an answer if traders are willing to risk more or less.
So, where do we go from here? Let’s take a look at what my models have to say.
Longterm main models
Both main longterm models remain bullish.
Weekly Socha Investing Longterm model remains bullish. See first chart for more explanation.
Daily Socha Investing Longterm model also stays bullish. See second chart for more explanation.
To learn more about my models, check this link. (Just in Slovene for now)
Midterm main models
Weekly midterm model remain bullish, no sell signal. On the contrary, an expansion in 1 month New highs – new lows continues. See chart 3 for more explanations.
Daily midterm model remains bullish as well, no sell signal. Volume and adv/decl oscillators are both in bullish zone. See chart 4 for more explanations.
Nothing more to comment here – bullish!
To learn more about Midterm model, follow this link. (Just in Slovene for now)
Outperforming/underperforming sectors
New trend strength indicator:
I added a new indicator with which I track performance of sectors. Second panel from bottom up. Purple line represents trend strength of underlying symbol; while orange line represents relative strength vs. S&P 500.
If both lines are moving higher and they stay in green area this is bullish; the opposite is true if both lines are moving lower and end in red area.
Green triangle: Strong absolute trend – Bullsih
Black triangle: Strong absolute and relative trend – Very bullish
Red triangle: Weak trend strength – Bearish
No sign: Neutral
Outperforming sectors
Technology sector continues to lead. QQQ Nasdaq 100 and XSD semiconductors joins the club with software stocks IGV and Cybersecurity CIBR. I also like that large caps AMZN, MSFT, GOOGL, AAPL continue to participate and hopefully we will see a relative and absolute breakout to new highs soon.
Financials XLF and Energy XLE managed to hold the breakout.
See charts for more explanations.
XSD – semiconductors – amazing week, breaking out to new highs 
MAGA – MSFT AAPL GOOGL AMZN – I like the development here. If large caps start to lead bull market is not nearly over. 
QQQ – off to races after underperformance since September 21? 
XLK – new highs, taking back the lead? 
CIBR – cybersecurity stocks closed at new weekly highs 
IGV – software stocks closed at new weekly highs 
XLE -underperformed this week but managed to stay above BO level 
XLF – financials, still strong after BO to new 52 week highs.
Russia – RSX was again a laggard this week; still above 50 sma and after big run, some consolidation is to be expected. If underperformance continues I will cut my position. USDRUB pair closed the week higher which is not favourable for RSX. See previous blog for explanation.
Underperforming sectors
Latin America ILF and Brasil EWZ and China FXI big laggards this week. China FXI has been a big under performer since February this year. Bottoming process in progress, we could revisit lows again.
ARKK looks like it had a false breakdown and shows some relative strength. Healthcare XLV had a strong week, but still underperforming S&P 500.
I would continue to avoid IWM, GLD, TLT, ILF, EEM and EWZ.
See charts for more explanations.
EWZ – another terrible week for Brasil, no time to rush in and catch falling knife. Bottoming is a process. 
ILF – similar to Brasil, no time to rush in and catch falling knife. Bottoming is a process. 
FXI – China – disappointing week, could it be that worse is not over yet? 
ARKK – worth keeping an eye on it. 
XME – still holding it’s ground for now. 
XLV – another strong week, but underperforming S&P500 
IWM – going nowhere, staying between lines, slowly improving 
KBE – regional banks losing leadership 
INDA – bad relative performance 
GLD – gold below 200 SMA, stay away 
TLT – good week for bonds, above 200 SMA, but still underperformer
Risk ON or OFF environment?
This week markets still in RISK ON mode, no changes from last week.
SPX is outperforming majority of defensive assets like XLU, XLP, TLT, GLD. Junk bonds JNK are outperforming US treasuries IEF while High Yield bonds HYG outperform TLT.
See charts for more explanations.
SPY/XLU Utilities – Risk ON 
SPY/XLP Staples – Risk ON 
SPY/GLD – Risk ON 
SPY/TLT – Risk ON 
JNK/IEF – Junk Bonds vs Treasuries – Risk ON 
HYG/IEI – Riskier High Yield bonds vs. Treasuries- Risk ON 
QQQJ – Nasdaq Next gen – looks ready to breakout higher, if that happens it is Risk ON 
IPO ETF – looks like it wants to go higher, if that happens it is Risk ON 
GBTC – Crypto strong week – Risk ON
Conclusion
Both Longterm and Midterm Socha Investing models remain bullish markets.
Short term Newhighs – newlows crossed an important line, indicating strong bull conditions.
Strong sectors – Nasdaq 100, Technology, Semiconductors, Software and Cybersecurity. Energy, Financials managing to hold breakout.
China had a bad week and is in a bottoming process. Has more work to do.
Avoid Gold, Treasuries and Latin America.
I rearranged slightly my portfolio moving more money back to technology sector, keeping Energy & Russia for now and reducing exposure to China.
Stay bullish, stay healthy and good luck.
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