“Trade less, hold positions longer and have flexible mind – market is not your friend. “
Another strong week is behind us, market gods remain bullish. In the last couple of blogs I was posting my bullish stance; you can check my blogs Stock market pullback or something bigger? and Stock markets: is the worst behind us?
Please not that my view is mid to long term, meaning weeks or months into the future. When I am bullish markets it does not mean that next few days cannot be red. In majority of cases I adjust my portfolio on weekly bases trying to filter out the daily noise. Only rarely I adjust my positions based on daily stock market moves.
So, where do we go from here? Let’s take a look at what my models have to say.
The answer to the question of which are Outperforming sectors and which sectors should be avoided is provided in section Underperforming sectors.
I am adding new section, where I address sectors which are performing well but underperforming S&P500; I consider these sectors as neutral with potential; follow this link to learn more.
In section Risk ON/Risk OFF environment, I provide an answer if traders are willing to risk more or less.
Longterm main models
Nothing new here both; Socha Investing main longterm models remain bullish.
- Weekly Longterm model remains bullish. See first chart for more explanation.
- Daily 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
3. Weekly midterm model remain bullish, no sell signal. SPX is above Weekly Bollinger band, a bit extended but the question is if this is bearish? I think not, see chart 3 for previous instances.
4. Daily midterm model remains bullish as well, no sell signal. 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, XSD & SMH semiconductors, IGV software and Cybersecurity CIBR.
Large caps AMZN, MSFT, GOOGL, AAPL, NDA and FB broke out to new highs this week. I like that they started to participate, bull market is not over yet.
INDA joined the club, KBE Regional banks and Russia RSX were kicked out of the club due to recent underperformance.
Financials XLF and Energy XLE manage to hold the breakout, but lag SPX.
See charts for more explanations.
QQQ – strong performance 
EQQQ – Equal weight QQQs outperforms QQQs and S&P500, speaks about broad market participation 
MAGA – MSFT AAPL GOOGL AMZN – I like the development here. Relative outperformance. Bull market is not dead! 
Large caps – MSFT AAPL GOOGL AMZN FB NVDA – I like the development here. Bull market is not dead! 
XSD – semiconductors – suggesting economy will recover in the next months 
SMH – semiconductors – suggesting economy will recover in the next months 
XLK – strong move 
IGV – software stocks closed strong 
XLE -still above BO level for now 
INDA – back in the list of outperformers, new closing highs 
XLF – financials, relative underperformance last few weeks, but still holding BO 
CIBR – cybersecurity stocks – not as strong as other tech sectors but still doing fine
Small and mid caps
Holding breakout, participation of small and mid caps is for sure good news for market bulls.
Underperforming sectors
Also underperforming sectos had a good week. China may be close to forming a nice bottom, while Latin America has more work to do.
ARKK – has a lot of work to do, lagging S&P 500. 20 year Treasuries continue to underperform.
I would continue to avoid TLT, ILF, EEM and EWZ; while FXI, CQQQ, KWEB and also GLD may be worth to start dipping the tip of toes in.
See charts for more explanations.
GLD – had a another good week, still underperform SPX, but could be forming a bottom 
TLT – bad week, resistance at 152 $ held, it is above 200 SMA, but still big underperformer 
KWEB – Chinese internet – bottoming 
CQQQ – Chinese QQQ – bottoming 
FXI – China – strong week, close to bottom out? 
EEM – similar chart as FXI, CQQQ, KWEB – bottom is in? 
EWZ – still not the time to rush in and catch falling knife. Bottoming is a process. 
ILF – similar to Brasil, still not the time to rush in and catch falling knife. Bottoming is a process. 
ARKK – worth keeping an eye on, but not worth investing in just yet
Neutral sectors showing absolute strength
This is a new segment I included into my weekly market review. What I watch here are sectors that show absolute strength (purple line) but are underperforming S&500 on relative basis (orange line).
These sectors are worth watching for potential investment or are also suitable to invest in. Absolute performance of these sectors is good, trend strength is excellent, but their relative performance to S&P500 is not that good.
XME – Metals – breakout in the making 
CARZ – automotive ETF 
DAX – Germany 
EU50 – Europe 50 large companies 
QQQJ – QQQ junior; me like a lot 
RSP – equal weight SPY 
NYA – NYSE index, >2800 components 
KBE – regional banks 
RSX – Russia, with recent sell off not looking so good 
VALUG – broad index, 1700 components 
WFH – work from home 
XLV – healthcare 
FFTY – IBD50 ETF
Risk ON or OFF environment?
This week markets still in RISK ON mode, no big changes from last week.
See charts for more explanations.
SPY/GLD – Risk ON 
SPY/TLT – Risk ON 
SPY/XLP Staples – Risk ON 
SPY/XLU Utilities – Risk ON 
JNK/IEF – Junk Bonds vs Treasuries – Risk On 
IPO ETF – looks like it wants to go higher, if that happens iit would be another Risk ON signal. 
HYG/IEI – Riskier High Yield bonds vs. Treasuries- Risk ON 
GBTC – Crypto – Risk ON 
QQQJ – new highs is very RISK ON
Conclusion
Both Longterm and Midterm Socha Investing models remain bullish; no sell signals, market looks healthy.
Small caps, mid caps and large caps breakout to new highs, broad market participation.
Strong sectors – Nasdaq 100, Technology, Semiconductors, Software, Cybersecurity, Financials and India.
Majority of sectors look very good, there is not a lot of underperforming sectors on my list, but even those look good.
China had a good week and bottoming process may be completing. If so expect sharp moves next week.
Gold also looks like it may be forming a bottom, but continue to underperform stocks.
Avoid Treasuries and Latin America.
I rearranged slightly my portfolio moving even more money back to technology, reducing Energy & Russia; increasing slightly exposure in China.
Stay bullish, stay healthy and good luck.
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