The S&P 500 Index sold off (-0.68%) for the second day, but it remains with a strongly bullish intermediate posture according to the Market Forecast technical indicator.
Similarly, the NASDAQ Composite (-0.92%) and the Dow Jones Industrial Average (-0.75%) both sold off but continue to have their bullish postures.
The Russell 2000 Index (-1.96%) sold off strongly and is becoming more concerning as it’s working the right side of a head-and-shoulders pattern. The Russell 2000 now has a weakly bearish intermediate posture and is trading below its falling 30-day moving average. It’s also worth noting that the Russell 2000 has a “3 Red Arrows” signal and its price closed below its 10-week moving average for the first time since October.
Momentum stocks have replaced Low Volatility stocks at the bottom of the Factor Selector rankings.
More than 50% of the Dividend Aristocrats closed higher today, whereas only 30% of stocks on the NASDAQ 100 closed higher. Dividend growth strategies have been outperforming dividend yield and high beta strategies as the market seems to be hunkering down in quality stocks.
The 10-Year U.S. Treasury Yield finished lower to 1.56%; for the first time in over 6 months 10-Year rates are now trading below a falling 30-day moving average.
The U.S. Dollar rose slightly, which helped U.S. stocks to outperform foreign stocks; we also saw oil prices fall. Gold prices rose and we’ve seen some interesting strength in the yellow metal at a time when Bitcoin has given back a big chunk of recent gains.
There was a decidedly defensive tone within sectors today with Health Care, Staples, Utilities, and Real Estate all closing higher. Energy was the weakest sector on Tuesday.
Our trade application example featured selling a bear call spread on the Russell 2000 ETF (IWM) due to the aforementioned head-and-shoulders pattern along with a bearish posture.
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The author may have positions in mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.
