MONDAY
Last week saw the small caps really struggle with the GOP tax reform ineptitude and impotence. The big names that just broke out of bases tested their moves but are holding up very well.
Chips tested as well, coming back to near support. Software is still solid, oil is making some good moves and more are set up to make good moves.
There is plenty of potential for the upside to resume. As noted earlier, there are calls that the selling has just started or is about to start.
It may, but from the action last week and the leaders that are still out in the market, I am not seeing imminent failure.
There can ALWAYS be events that appear to upset even the best setups. Plenty of geopolitics, growing threats in the Middle East, continuing threats from Korea. The continued playing politics in our cesspool of a federal government, playing with our lives and our finances as they play power politics.
The market, however, has shown strength through it all. For now, at least, there is still the notion that the upside potential outweighs the downside given the status of the Fed and the chairman transition, the regulation rollback, a more business friendly climate (for all but certain groups it would appear), and still the outside hope of a meeting of the minds and votes on tax reform.
Therefore with the setups we see, we are still looking mostly upside. Oil, semiconductors, big industrials, retail, FAANG still sport solid setups we want to ride higher if they show the moves higher.
Source: Investment House