Market averages rallied yesterday on mixed volume, heavier on the S&P 500, with the S&P 500 closing in the lower half and the NASDAQ Composite in the upper half of their respective trading ranges. The small cap Russell 2000 and financials outperformed once again.
As the yield curve continues to steepen, the strong dollar puts a weight on larger cap tech stocks which are heavily globalized. This partially explains the lagging performance of the NASDAQ-100. Sector rotation into Trump-favored areas has also been a factor.
While the Trump rally has pushed the Dow Industrials into new highs, the question is whether the Fed has any room to hike rates in any meaningful manner without bursting the QE bubble. Meanwhile, the ECB meets this Thursday and is expected to keep their QE engine humming right along and may even press the accelerator.
The lack of global growth despite record low interest rates speaks volumes to the sovereign debt crisis in which the planet finds itself. As a growing number of notable investors and fund managers with outstanding long term track records have said, this cannot end well.
Over the weekend we mentioned that Qualcomm (QCOM) and Gigamon (GIMO) should both be watched for rallies back up into their 50-day moving averages as potentially shortable moves. GIMO is still well below its 50-day line, but yesterday QCOM rallied 2 cents beyond the 50-day line before backing down to close a little less than 1% below the line. This would still be in a shortable position, using the 50-day line plus another 1-3% additional upside "porosity" for a tight stop.