Stocks are diverging, with tech leading blue chips after a strong trading day Wednesday, which will muddy the waters today…
Whenever we have divergence, it’s hard to get a clear picture of where the market stands because of the tug-of-war — you can’t build momentum with the major indices heading in different directions.
And to add insult to injury, the Dow is down over 100 points after strong bank earnings. The fact that it’s down a day after strong numbers is a bad sign.
Even with Wednesday’s strong market move, we only have 104 stocks breaking out (90-day breakout), which also tells us we don’t have much momentum.
The S&P 500 (SPY) is also at its 50-day moving average, which tells us there’s a good chance we’ll open up and come back down. Or if we break through, there likely won’t be much momentum higher there.
So anytime you see divergence like this, it’s a big yellow caution flag.
Retail Sales also came in a little light this morning. I don’t much care for the month-over-month number — year over year is far more important — but it being light isn’t helpful.
We also got some important earnings this morning, and Taiwan Semiconductor (TSM) is up big, about 5.4%…
I’ll cover all that, my daily hitlist of longs and shorts and more in this morning’s “Premarket Must Watch” video!
Roger Scott
Roger Scott Trading
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The profits and performance shown are not typical, we make no future earnings claims, and you may lose money. From 2/25/20 through 1/9/25, the average win rate on live published trade alerts is 77.14%. The average weighted rate of return on options trades was 10.78% over an 11 day average hold time.