The Stock Market Is Running Rich

The stock market is beginning to show some over-exuberance as we head into earning season and the election date draws near.

Amazon prime day and an apple event are scheduled this week with other companies, like Target and Walmart joining in with their own sale events to compete. 

This could make for a push higher in the retail sector as companies gear up for an increase in online sales. 

Along with retail, the Homebuilders Sector ETF (XHB) holds a 76.39% gain over the past 6 months. 

This sector has grown with the pandemic as many who are working from home now have more free time and incentive to upgrade their home/workspace.

It should also be noted that MarketGauges Risk Gauge has remained bullish. 

vxx short term volatility stock market etf analysis chart image

The Short Term Volatility ETF (VXX), which is used as a fear indicator in the market broke down last week as the market rallied.

Today the VXX showed small amounts of movement taking more of a complacent stance. 

The Regional Banks ETF (KRE) which has been considered the weakest link awaits the start of earnings season, with the big banks up first.

The bottom line is that while technology stocks made a huge run Monday, bank stocks have stalled, and energy continues to drag. 

The stock market is shrugging off all negativity as the stimulus has yet to pass, the divide of the country grows with the Supreme Court confirmations and Covid-19 continues to spread.

We reached a target in our quant model today for the NASDAQ. Additionally, we reached profits in emerging market positions along with a stock in consumer discretionary.

And that is the point-taking profits into the euphoria makes sense. Tightening stops on all positions makes sense. And watching to see what the dollar does plus whether the EU goes the way of negative rates, also makes sense.

In a house of cards, volatility can happen at blinding speeds. 

Michele on Market Overtime with Nicole this past Friday talking Portfolio Rebalancing, here is a link:

https://tdameritradenetwork.com/video/rB4AoXUNF1GBdQ9JzisBqQ

Key trading levels for stock market sector and index ETFs:

S&P 500 (SPY) Watching for a test of September high of 358.

Russell 2000 (IWM) Coming into resistance at 169-170. 

Dow (DIA) 280 Support. Resistance 292

Nasdaq (QQQ) 280 support. 289 resistance.

KRE (Regional Banks) Resistance at 40-42. 38 Support

SMH (Semiconductors) 184 support with new all time highs.

IYT (Transportation) Support 207

IBB (Biotechnology) 137 Support Resistance 146

XRT (Retail) 53.50 needs to hold. And needs to clear 54. Could see another push up with many online sales happening this week.

Twitter: @marketminute

The author may have a position in the mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.

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