Most EV individual and sectors graphs show the same bouncing pattern. The upper panel of the 20DMF also indicates that money suddenly moved back. However, the lower panel hardly moved up, which is an indication of how deep the selling has been.
Take a look at the sector-based 2D thrust. We can see that money flowed the most into REITs and homebuilders, both of which are highly sensitive to interest rates. The market seems to be serious about the FED's willingness to keep rates low.
So, if this is the case and with China openly stating that they will not continue to fund the US deficit, the FED will need to buy new bonds in order to keep rates low. So the market took this as an announcement of further US$ debasement. This does not say that US equities will not tank, but yield seeking investors will probably be buying dividend paying blue chips, which will put a floor below the market.
Now, we will see if this "high level" analysis will be followed to the letter.
You will also note in the table below different colors that point to financials short covering activity, gold refuge seekers, etc... But you might also note a large group of sectors not present at all in this table: energy! It is the group that has sustained the most damage during the sell-off and which will probably reverse back the quickest when it will be clear that oil is in short supply and is a store of value against monetization.
In the meantime, we once again do nothing but see how the market reacts to yesterday's FED announcement.
You might try to short stocks that bounce back to their resistance zone (see the stocks with the worst ratings filter), or wait for a buy signal to be issued either next week or the following week.
Pascal
