Reversal Day Today ? Let’s Go To The Charts…

The reversal in the Russell 2000 and biotech’s today was pretty significant since these groups have been leading us lower, along with Energy, Basic Materials and Transports.

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These timely charts posted today by Chris Kimble of Kimble Charting Solutions tell an important story in my opinion, and coincided pretty closely with the bounce today.

A break below today’s lows for the SP 500 and you’d have to think we are headed much lower.

In 2015, the largest holding for clients did well:

5% – Microsoft +20% for ’15

4% – Schwab + 9% for the year

3.5% – Amazon +110% on the year

3.5% – GE +20% on the year (added to client accounts after announcement of GE Capital divestiture, added still more after Trian)

3.2% – Boeing: -10% in 2015.

There were more than a few lemons, too: Whole Foods (still have about 1/3rd original position), Twitter (sold all at $28), went long the Japanese Yen and the DXJ for 6 months in 2015, and remain long Ford and GM, two of the biggest disappointments, given that both Ford and GM were expected to grow earnings +50% in 2015.) The Industrial stocks have not performed well.

Per another good technician I follow closely, Gray Morrow, who can be found at @garysmorrow and Thestreet.com, semi’s acted well today. Usually if semi’s trade well, Technology will follow.

The Cloud remains a secular growth story: Amazon, Google and Microsoft, are all prime Cloud beneficiaries. Large-cap growth, despite the valuation issue, could be a place to hide in turbulent waters this year.

Today, January 20th, 2016 could have been a significant turn for the SP 500. We’ll know within the next few days and weeks.

Look for a soft or weaker open, to be followed by decent rally through the day, and then a strong close at the highs on good volume. That type of trade has been absent all year.

 

 

 

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