What Will Monday Bring?

All the talk about a rotation out of technology and into more “value” oriented areas, will grow in the coming weeks. On a very basic level it was the S&P 500 that rose 1.2% this week, while the Nasdaq fell 1.1%. Technology was the worst performing major S&P sector this week, and one of only two that lost ground this week (industrials and materials each rose more than 5%). My two cents is that if we lose technologies leadership in a meaningful way, I think it will adversely effect the overall market. If the sector can just take a rest, and keep in the middle of the pack akin to a smart jockey that has a lot of horse under him in a thoroughbred race, then it will likely see a surge again into the fall. On the chart below traders can remain confident as long as the 21 day EMA holds firm. Notice it has been below the line intraday several times since reclaiming it in early April, but recorded zero CLOSES below. Interesting will be Mondays action, as this past week started with the Nasdaq up better than 2% early on, yet CLOSING 2% lower. Remember the loss put an end to 10 winning Monday’s in a row. The early enthusiasm was brought on with the ADI MXIM takeover news. First time in awhile I can remember good news being interpreted as bad.

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