We Better Bounce Here- September 26th, 2020

The US markets were split with a rising Nasdaq 100 and a small move down in the $SPX. Tech stabilized this week and closed up. Lots of the tech charts are consolidating sideways and closed Friday near the top of the consolidation range. Names like NVDA, AAPL, SHOP, WDAY are good examples. After Options Expiration on the previous Friday, this week had three of 5 days up for the Nasdaq. It wasn’t a huge move up, but some big down days were quickly repaired. With the strength of tech, this week could see the rally try to run higher. That would be my bias based on the charts.

It has been 4 weeks since we topped out from the spire to end August.
From the 2nd of Sept, we have been working our way lower. However, the
consolidation is finding support at the start level of the year for the
$SPX. I mentioned it a couple of weeks ago as an area for support. It
seems like its holding.

While the markets were flat to up, we had huge down momentum in the
individual names. Over 500 stocks in my scan were down > 10%. Fiftysome were up 10%. So a lot of heavy lifting was being done by the stability of tech in the indexes.

Commodities got smoked this week on a huge move in the US Dollar. It was a train wreck on that asset class. The commodity related stocks fell HARD. Most commodity related names in gold, copper, silver, oil, rare earth, lithium, timber, steel and coal all dropped. The one positive change was the front month on Natural Gas, up bigly over 30%.

In currencies, it was a-one-way-train! The US dollar soared, which I called the raging teenager trade. It was just sitting in a consolidation range and then exploded higher almost every day for the week. Where did that come from?

Summary: The tech names are consolidating and look ready to run. When the US dollar broke, it crushed all hopes for the commodity buyers. The last three days of the five, the commodity indexes tried to hold their lows. Can they make the turn higher this week?  

Let’s jump into the charts. Click on the image below to view the full newsletter in PDF format.