So far, we have had a trading range open—this time in the form of a converging triangle. The triangle wandered around the RTH open, as most do. We have now broken to the upside of the triangle and above the VWAP. But the market is a bit tentative.
This is what rotation looks like. The S&P 500 is being pulled in two directions as the result of the stronger-than-expected employment report.
Institutions are reducing tech and growth stock exposure and substitute financials, energy, transports, industrials, and even small caps. The latter group is coming off a three-month correction, and the former is in the stratosphere. One day does not make a trend, but the sell-off in bonds and jump in interest rates force a reordering of thinking.
We are not likely to see a larger move or breakout until later in the day if we see one at all. The push/pull of the sectors creates a bit of an unresolvable math problem, at least short-term.
On a positive note, the market is holding the important balance range breakout. That is the key to this entire session. Regardless of rotation, the big cap tech stocks have enough weight to take everything else down with them. So the market must close above 4422.75 to keep the trend and breakout alive.
My next update will be after the close. Remember, other than View From the Top Down, my weekly macro view, I will be out next week, so no daily updates.
Have a great weekend.
A.F. Thornton