One Industry That Is Conducting All The Gains
– ETF Watchlist –
One thing you don’t expect to see if we are in a bull rally is limited participation by the other sectors of the market. Typically, in a raging bull type of market most sectors would be well in the green, unfortunately, that is not what we are getting at the moment.
You have isolated pockets of green, mostly from the tech sectors, but looking at the heat map from Thursday, we have a lot more red than green. Now, it would be ok if we only had red in areas like healthcare, however, that isn’t where the red is limited to.
This situation gives us pause before we take a bullish or bearish stance on the market. Why? Well, three things could happen. First, we could go right back to a choppy market where we just bounce back and fourth until we find some kind of catalyst, like the debt ceiling to send us in one direction or another. Second, we could resume the rally, but for it to be a healthy one we would want broader participation.
Finally, we could see a second part to the pull back we have already had in the market, at which case, this would probably give us the best opportunity to get long again. Since all of these scenarios are just as likely to play out, it is difficult to say what kind of trade we should look to put on.
VanEck Semiconductor ETF (SMH)
However, there is one sector that had a better day than the rest on Thursday, no doubt helped along by the surge in Nvidia’s (NVDA) price. This would be the VanEck Semiconductor ETF (SMH), which had an 8% day on Thursday. If the strength continues in this area of the market, you could catch a ride.
But, if there is to be a healthy pull back, that could very well be in the cards if Nvidia runs into some resistance. For now, I wouldn’t suggest stepping out in front of this oncoming train, but if you do play it to the upside, look for the best entry possible.
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