An end of day selloff materialized as day traders and position traders left the market at the end of the day and end of the week.
Longer-term, the Money Flow still looks weak, but the rally has statistical legs until the end of the year. There is indeed probably the potential for another 1% gain on the S&P500.
You can see below that the bounce is mainly focused on large cap stocks.
There is nothing much that can be added on the general market trend. I hence will take some time to write about the energy sector.
Both oil and Natgas are in a weak situation with negativer Total Effective Volume trends.
We can see below that XLE displays a stronger Money Flow than the one calculated on the whole energy sector. This is because XLE is composed of the largest energy conglomerates, which do attract money (CVX, XOM, etc.) from Index investors in ETFs.
Smaller caps move on their own merits. Hence, the Money Flow of the whole energy group is weaker because this includes both small and large caps stocks.
Comparatively, we can see below that the Canadian energy sector is displaying a very weak money flow because this group only includes mid or small caps stocks in a Canadian market that is basically not followed by foreign index investors.
Even though the whole energy group looks weak except for the conglomerates and the refiners, we can see below that some energy stocks are attracting good money. This does NOT mean that they are good buys here. It means that IF the whole sector bounces, then these stocks will bounce higher and faster than the rest of the market.
Note that these stocks are about 50 to 100 times smaller than XOM. Hence, they will hardly move the energy market and will also hardly move independently of the energy market (in the absence of specific news.)
Note below that driller HP, which is one of the large drillers, displays a negative EV pattern. This also tells us that the drillers or the producers or even the energy service sectors are not ready to bounce yet.
What do we need to follow then?
We need to buy the small energy stocks when we see a bounce in oil and natgas combined with a bounce in the Canadian energy sector.
On a side story, if we compare both US and Canadian materials and mining sectors, we can see that both are rather bullish. This indicates that both are moving on their own merits and not on ETF and index money.
Conclusions:
The S&P500 still has legs for another 1% gain until the end of the Year.
Energy is one of the weak sectors that could bounce if Oil and Natgas start attracting money again.
