Deere In The Headlights:
Even after today’s monster reversal, and remember these are typical in bear markets, there are still only 3 of 11 major S&P sectors higher YTD (two are up less than 2% in the utilities and staples, and of course, energy is the huge winner thus far). Looking at the industrials the XLI is in the middle of the pack lower by more than 6% in 2022. Defense names have been the strongest with the ITA off just 6% from most recent 52-week highs and the ETF has now made 5 higher lows since last November. Could today have been a meaningful bottom? Of course but no one knows for sure, and if one is looking to establish core positions do so in stocks that have weathered the storm the best. Below is the chart of DE, which could be a good example. The very round 400 number was problematic in May ’21 and again this February-March. Those wading in anticipation of a break above 400 in February were in for a rude awakening as a 75 handle drawdown occurred. Wednesday it was rejected there once again (which was also 50-day SMA resistance), but it has cleared a bear flag formation to the UPSIDE. A CLOSE above 400 this week could propel a powerful move higher.