IT’S THE FINANCIALS DUMMY
Bulls: You want the sector that is going to turn your dreams of an unlimited budget for a holiday shopping spree into roadkill? Look towards financials.
Bears: You want the sector that will allow you to buy your mistress a Bentley? Look towards financials.
Following today's action in the market - led by financials to the downside - you have to start worrying if you are a bull. The patterns in companies like BAC and JPM remain uninspired. And meanwhile, even the iron men of the financial sector are beginning to see weakness and it's as a result of earnings. Case in point: WFC today.
In the meantime, technology is the Lone Ranger of the current market. What it all adds up to in the end is the high probability of continued sideways action until either financials begin picking it up and takeover the leadership role to the upside. Or technology succumbs to the bear-mower run of the past couple of weeks and sinks alongside financials.
There is a reason why I remain with only a position in ZSL and the remainder of the portfolio in cash. It is out of an understanding that I lack understanding as to how this will play out. I said last week that the best case scenario going forward would be a sideways trading range. I have no desire to sit through a sideways trading range in the type of environment where slow torture is passed around the table like a bowl of Stove Top stuffing.
What will turn me bearish? A close below 1180 on the S&P 500 would begin the process.
What will make me bullish? A continued range bound pattern that stays inside of the 1190-1230 range for the majority of this week.
There really isn't much more to consider. Overthinking is always your enemy. Genius always hides in simplicity.
