A funny thing is happening and that is that there are suddenly a huge diversity of opinions among market pros and commentators on what is happening and at the same time a complete lack of interest among the masses in market trends right now!
The reason why the latter is happening is because everyone is bullish and no one is really worried about a market drop.
I had CNBC on yesterday and saw a guy on there recommend buying calls on the QQQ as he was convinced a massive rally was just starting.
I’m skeptical of that, but in my view the important moves are happening right now not in the stock market, but in the bond market and US dollar.
The bond market appears to be ending it’s big secular bull market that began in 1981 and if it is then this marks the biggest bubble in human history starting to deflate.
I see yesterday’s move as simple follow through from Friday’s computer robot buying that saved the SPX 2662 support leel and generated a new short-term rally. The move is in danger of running out of steam before this week is over. That doesn’t mean the market is about to crash, but more that this is just a driting dull market right now not as exciting as this CNBC guy was making it sound. I forget his name.
But no matter if you are bullish on stocks or bearish there is one sector I think is best to avoid now at all costs and that is energy stocks.
Take a look at XLE the ETF for energy stocks and you’ll see why.
This ETF and the oil sector got smashed when the market dropped and has barely been able to rally at all.
It’s turned into a real laggard.
And that’s bad.
You want to buy sectors that are the strongest in the market and not the weakest.
Right now the CNBC guy is right in one sense and that is if the market does rally this summer it will be led by tech like he says.
But if it falls things like energy stocks will be among the worst hit and they may fall anyway.
For more on my trading methods and my favorite buyingn setup grab my new book The Two Fold Formula.