• Back into a one sided market

    The NQ100 sector sailed higher Friday, led by the NQ8 leaders.





    The strongest group of the S&P500 greatly outperformed Friday. A strong jobs report was enough for funds to pour money in the most liquid stocks.



    Most of the XLX figures are negative or neutral, compared with XLK, which is behaving like a money magnet. See below for example XLF and XLK.





    Going into details, below are the two Effective Volume based money flow tables for XLF and XLK, taking only in consideration the 10 strongest and the 10 weakest stocks of these ETFs.

    First we can see that the total positive XLK money flow is about 10 times stronger than the total of the weakest XLF money flow. This indicates that XLF is irrelevant even when negative!

    The second remark that can be made is that the three strongest XLK stocks - AAPL, MSFT and GOOG - individually display a MF that is stronger than the whole negative MF of XLF, but also the whole negative MF of their own sector: XLK.

    This is really a one-sided market. When money flows into the mammoth stocks, naturally all the ETFs are pushed higher, pulling along even the weakest stocks and initiating short squeezes in the normally struggling small caps. Let's pray to the market gods that AAPL doesn't fall victim to competition or trade wars.





    On the interest rate side, we can see that US rates bounced on the jobs report.



    However, the 20Y were barely sold on Friday.



    When we look at the Thrust on each industry group we can see that REITs and Utilities were weak but that gold miners are at the top of the list. This is strange in a higher rates environment.

    (As a reminder, the Thrust is a 10 days normalized measure of the total effective volume averaged by sector in each group. This measures the relative attractivity.)



    Gold itself is also attracting money.



    US$/Euro strength seems to be attracting sellers here, which offers the same message as gold buyers.





    Conclusions:

    What we are witnessing in the above Figures is probably a cross current between

    * the strong US economy - good jobs report - which forces funds to invest into equities through ETFs and the most liquid high-tech stocks
    * the trade war issues that might come splashing onto the market's face as the latest G7 meeting over the weekend and European leader made it clear... and instills US$/gold selling.

    In such a situation, forced equities buying might be good for funds, but I doubt that it is wise to individual investors. Neither is shorting a strong market very wise.