Hang on a sec gang, it’s 5:30 AM & just rubbing my eyes to make sure I’m seeing this correctly. Ok, yep, looks like futures are red, somehow, someway, they are showing some early weakness.. There was additional Coronavirus news last night that China will be using a different way in calculating deaths from the virus & because of this, there has now been a spike in death toll off this virus .. Whatever the F that means, I have no clue.. Regardless, we finally get to see how Sweepers treat a little weakness for a change .. More importantly, cool off some heat on our Tactical Sentiment Indicators .. Interestingly enough, that’s exactly what we’re seeing currently out of sentiment.. A little short term heat, especially any readings related to a put/call ratios.. The rest of our indicators our a mixed bag .. Take for examples the traditional indicators such as the AAII & Fear/Greed indicators we use, they’re basically neutral .. Some of the other stuff we look at are a bit more bullish (bearish for us) but the takeaway as a whole was simply the sloppy bulls in recent days needed to get a jab to the jaw over the short-term.
Our playbook has remained to stay tactical throughout this earnings season & Coronavirus episode, careful chasing extended green & to be extremely selective with everything else especially for positioning over the IT.. With the assistance of this morning’s weakness, we can get solid clues to whether Wiseguys are positioning in: (1) rotation type cyclicals & economically sensitive names that have lagged this recent rally.. (2) continue to rotate back & forth while focusing on hot growth (software) & bond proxies on days of weakness.. (3) or simply they just buy everything & the Fed forces money into equities on any signs of a pullback or weakness .. There’s also always the scenario where buyers crawl into their hole & hide, put sweepers grab the ball & we see further selling across the board, although with the Fed leaving the faucet of liquidity running, its really tough to see that playing out in a big way til late March .. So pay attention to any clues we get today & if playing the playbook (tactical), all of the above scenarios are a GO for short term trade opps.. GOOD LUCK TODAY!