- The US GDP which put strength into US$ (against all other currencies except for the GBP) with the expectation that the Fed needs to raise rates.
- A correction for the IC manufacturers on the base that Bitcoin mining would not push IC sales much higher.
- A correction on the overbought NQ8 stocks, which I believe came as a consequence of selling in the Semiconductors, since algos detected negative liquidity and acted accordingly for most of the overbought stocks that were in related sectors.
- The coming Tax deal, which forced a rotation from the Tech sectors into the more stable/traditional sectors such as Industrials.
Here are the related Figures:
1. Currencies:
Note that the strength in the GBP/Euro is coming from a probable coming Brexit financial deal.
The Canadian Dollar weakness probably originates from a weakness in oil.
2. NQ8 and SOXX
3. Rotation into other non tech sectors (XLI for example) and 20DMF bounce
4. QQQ Index investors got nervous, but SPY investors still want to stay for the Tax deal bounce.
Conclusions:
Investors still want to trade the tax deal, meaning: stay long.
Algos will amplify any liquidity move.
I have written in the past that the NQ8 stocks will break the markets. I am not so sure now, because of the rotation that we witnessed yesterday: investors want to stay invested because of the coming tax deal. SO the question is what happens when the deal goes through and no bounce materializes because it is 100% priced in?
This tells us that until the Tax deal is voted, NQ8 stocks could bounce as fast as they went down. It is just a matter of liquidity.
