Bellwether Blues:
We have often mentioned this year that as goes AAPL, being a proxy for the markets with its huge representation in the indexes, the benchmarks will follow suit. Unless one has a very short memory, it would be wise to remember the 12 of 14 week losing streak between weeks ending 10/5/18-1/4/19 that fell more than 100 handles and 39.2% from top to bottom. To be balanced if fought back very strongly, advancing 20 of the last 29 weeks, and eking out a fractional gain this week thus far. But earnings reactions the last couple times, although rising, have signaled a short term top in the stock. Deja vu?
Leadership Revolt?
Software unquestionably was the leader, not only within technology, but the overall markets. Although 3 of the top 5 holdings in the IGV are holding up well (“old tech” names ADBE MSFT INTU are all just 2 to 5% off most recent 52 week highs), others are flashing warning signs. Other top ten components like NOW is off 5.3% this week so far, undercutting its 50 day SMA in firm trade. ADSK is trading 14% off most recent 52 week highs, and has slumped 8.6% this week heading into Friday. To be fair names like COUP and TTD are still holding up relatively well, but as more stocks within show fatigue, it will be harder for the fewer top rated names to keep the sector afloat. Keep a close eye on this development going forward.
Examples:
The FXI is lower by 4.9% this week with one session left, which if it holds would be its second worst of 2019 behind the drop of 6.5% the week ending 5/10. Some names within were holding up relatively well recently, but the chart of YY was not one of them. Additionally it was underperforming a very strong overall technology sector. Below is the chart, and how it was presented in our 7/23 Tech Note. It now trades 38% off most recent 52 week highs and closed July out with gaining just 5 sessions. This week is demonstrating more weakness down 5.4%, and it has already slipped 11 of the last 14 weeks. The break below the descending triangle Thursday carries a measured move to 40.