NQ Rotation 11/24/2020
NQ at the daily.
As suspected, NQ will be lagging since the rotation from growth to cyclical stocks continue. How long will this take? Longer than people expect. Will NQ breakout? Eventually. Market breadth has to increase even more and that will drag the NQ higher.
Until then, I am expecting some sort of decent pullback for the indices. Most likely not this week since it is a holiday week. Normally, holiday weeks are slightly bullish with very low volume.
The only other way the NQ can rise fast (besides post-rotation) is giant nationwide lockdown. Chances of that happening? Almost zero. Why? Different states have different types of economies. Some manufacturing states cannot afford a lockdown and will be adamantly against it. It makes sense really. When faced with the decision between working (catching the virus) or seeing your family starve, most would risk going to work and catch the virus. Besides, the shock and awe of lockdowns lost its luster after the first time.
It makes sense that tech's growth is now muted. The sentiment for tech is still crazy bullish. Most of the shorts were wiped away during the summer uptrend. So, there are not many shorts left to cover and bring the NQ up. That's a very different story with RTY. RTY was loaded with shorts since April and it all blew up at once. Now, RTY is at all-time highs.
As suspected, NQ will be lagging since the rotation from growth to cyclical stocks continue. How long will this take? Longer than people expect. Will NQ breakout? Eventually. Market breadth has to increase even more and that will drag the NQ higher.
Until then, I am expecting some sort of decent pullback for the indices. Most likely not this week since it is a holiday week. Normally, holiday weeks are slightly bullish with very low volume.
The only other way the NQ can rise fast (besides post-rotation) is giant nationwide lockdown. Chances of that happening? Almost zero. Why? Different states have different types of economies. Some manufacturing states cannot afford a lockdown and will be adamantly against it. It makes sense really. When faced with the decision between working (catching the virus) or seeing your family starve, most would risk going to work and catch the virus. Besides, the shock and awe of lockdowns lost its luster after the first time.
It makes sense that tech's growth is now muted. The sentiment for tech is still crazy bullish. Most of the shorts were wiped away during the summer uptrend. So, there are not many shorts left to cover and bring the NQ up. That's a very different story with RTY. RTY was loaded with shorts since April and it all blew up at once. Now, RTY is at all-time highs.