The stock bulls continued to push higher, while the corporate junk bonds didn't confirm the stock advance to such a degree. So, where are the stock advance engines and are they likely to go on firing?
Healthcare (XLV ETF), financials (XLF ETF) and consumer discretionaries (XLY ETF) are among the best performing sectors today - but still, they have only retraced certain parts of their yesterday's downswing. Technology (XLK ETF) hasn't managed to do that (Amazon, Microsoft, Apple and Alphabet are not today's shining stars) while the stealth bull trio (energy, materials and industrials) continue lagging behind in their retracing attempts too.
But the stock index is still attempting to move higher, regardless of not having the key upswing drivers aligned behind the attempt. Smallcaps (IWM ETF) are also performing less than strongly, trading with a sizable upper knot and well below yesterday's closing prices. This subtly points to the bear takedown risks being still very much present in the market.
Okay, these are the clues for the 500-strong index. But we are trading the index and have to respect its swing structure with the potential overshoots. And it tells us that should stocks (driven by the tech comeback later today) play catch-up and take prices above 2870, the risk of further gains in the lead up to tomorrow's retail data would be there. That's true regardless of the incoming data likely to be worthy of a horror show, and the market selling off in its wake.
As a result, let's adjust the open short position's trade parameters - please see below.
Trading position (short-term; our opinion): short positions (100% position size) with stop-loss at 2870 and the moved take-profit target at 2720 (it isn't binding take-profit), which is where the 50-day moving average is.
Stock Trading Strategist
Sunshine Profits - Effective Investments through Diligence and Care