Today the market was indecisive.
The four major indices closed with an inside day pattern. An inside day is a two-day price pattern where the high and low from the second day doesn't extend past the price range of the first day. You can see this on all the charts above.
Inside days are digestive, lower-volatility days where the market consolidates before its next move. The market has a lot to digest at the moment, with the pandemic, social unrest, stimulus and the next presidential election. Once the presidential election is decided, we hope it brings more clarity to which sectors get a boost even higher and which ones fail.
Currently, we've seen growth in most sectors, with solar and clean energy leading the charge. The solar sector (TAN ETF) is up 136% in the past 6 months, while clean energy (PBW) is up 110%. It should also be noted that PBW holds multiple solar stocks. Other worthy sector mentions are the homebuilders (XHB 44%), transportation (IYT 36%) and the retail sector (XRT 44%).
On the other side of the list, we have Energy (XLE -19%), Oil and Gas exploration (XOP -12%) and Natural Resources (IGE -4%) All the percentages I've given above are based on a 6-month change.
It can be tough to make sound investments without knowing who will be in charge, and, with today's sideways price action, the market seems to reflect that same idea. Plus, any contested election or gridlock (Senate blue under Trump, Senate red under Biden) will bring a host of other issues.
Sometimes, the best thing to do in this situation is wait until clarity and a definitive trend.
- S&P 500 (SPY): Inside day. Confirmed Caution Phase with second closer under 50-DMA
- Russell 2000 (IWM): Inside day. 155 best underlying support at the 50-DMA
- Dow (DIA): Inside day
- Nasdaq (QQQ): Inside day. Sitting on 50-DMA possible support
- KRE (Regional Banks): Sitting on 200-DMA.
- SMH (Semiconductors): 176 support the 50-DMA
- IYT (Transportation): 200 support where the 50-DMA is
- IBB (Biotechnology): Flirting with the 50-DMA. Showing consolidation in $135 area
- XRT (Retail): 52 support, making this too a sector to buy if market holds
Mish Schneider
MarketGauge.com
Director of Trading Research and Education
Forrest Crist-Ruiz
MarketGauge.com
Assistant Director of Trading Research and Education
