Frying In A Hot Vat of Tech

It was very obvious yesterday morning that we were overbought, the sentiment was too bullish, and some pain needed to be felt.  I said as much on Sunday night, I told you all that I didn’t like the fact that I was skipping over lower beta names out of fear of a melt up.  EVERY SINGLE TIME I hear or think melt up, we pull back.  Why, because we are churning upwards, and will continue to do so.  The 50 day moving average has to be bought on the downside, and euphoria must be sold on the upside.  I’ll admit, I didn’t cut my position sizes like I should have yesterday morning, and for that I am now giving back some hard earned alpha as I fry in a vat of hot high beta tech.

I’m not cutting the tech exposure though until Thursday afternoon, at the earliest, before Intel $INTC reports.  I highly doubt they are going to let this sell off get rolling at least until that point.  In fact, I think you can step into some positions right here, while the $QQQQ is holding above that 20 day moving average, with tight stops and small position sizes.

I’m scared of the $MTL chart, I don’t like that failed breakout, and the steel industry components have run too far too fast.  I see more downside there.

The $XLB chart that I posted the other day was prescient.  It was rejected right at the area of long term resistance I pointed out.  That level won’t be taken out easily, it’s going to take at least a few weeks, if not a few months.

Action in the US Dollar $USDX will have a lot of say in how the $XLB components act.  I’m looking for a dollar rally now off the 50 day and bull flag put in.  I think everyone else is looking for the same thing, which is why there needs to be a shakeout.  Or maybe it just rolls over to new lows, that rejection from the 200 day may have been a major event.  Either way, listen to what the chart tells you, I have a view, but I won’t allow myself to have a bias, trade what you see.

I’m loving the healthcare sector right now, there are so many good names to dip into, but I won’t stash more money in those trends until I see tech really roll over.  I don’t think this is going to happen, but that’s my plan if it does.  I own $VRX, $CERN, and MHS in that sector, and stupidly sold out of $ESRX a few days ago.

I like $APWR and $URBN here, along with $CYH, $MOS is also giving you a good long entry if you don’t have cow shit exposure ;)

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