In a wild and unprecedented week of made-for-TV headline news, the week's absolute top story was on Friday when it was revealed that President Trump and the first lady, along with several key personnel in the Republican party, contracted Covid 19, states John Person of PersonsPlanet.com.
As of this writing, President Trump appears to have a mild case. However, every precaution was taken as he was treated with Remdesivir from Regeneron (REGN) and admitted to Walter Reed Medical Center, Friday afternoon.
My take is, if he has a full recovery by the end of this week, the market will bounce. If he seems better Monday morning that alone may spark a late-day relief rally on Monday. From a contrarian perspective the CFTC COT data shows small speculators are almost neutral with a small bias (.10% of open interest) to the short side in the e-Mini S&P futures. The recent strength in all the top indexes from the breadth (advance/decline) indicates strength in numbers. The volume trend using On Balance Volume is also in a position of accumulation, not distribution in the SPY (SPY), but more importantly in the Russell 2000 IWM (IWM).
This sector ETF began to show signs of improvement over the SPY (SPY) since September 3rd. There is a subtle identification of rotation from high tech to both value and small-cap stocks that looks like it could prevail moving forward. Seasonally, this is the time to position ahead for the “January effect” where small caps outperform large-cap stocks. Examine the year–to-date (YTD) & week-to-date (WTD) performance. If the Russell could play “catch-up” with the other indexes, this could be a massive upside move in the next few months.
S&P 500 (SPY) up 5.23% / weekly: +1.58%
NASDAQ 100 (QQQ): up 29.58% / weekly +.91%.
Dow Jones Industrial Average (DIA): down -1.31% / weekly: +1.87%
Russell 2000 Small Cap Sector (IWM): down -6.82% / weekly: +4.28%
For this week:
Watch for key reversals in Ralph Lauren (RL), Under Armour (UAA), 3M (MMM), and Alaskan Air (ALK). Why? All four have improving volume patterns that are supportive, with good PMC readings; seasonally, these three stocks tend to bottom in the first week or so in October. However, they are all currently in a weekly PPS sell signal.
For this reason I am not buying just yet, but I will send an email alert to do so on that daily set-up. Self-directed traders watch MMM for a daily close greater than $164.48 to enter a long. I suggest using a 7-10% stop loss from entry price. I would also pay closer attention to long set-ups in the leveraged ETF in the Russell 2000 (TNA). One would like to see a pullback to enter a long near $31.80 - $32.50 with a tight stop below $29.25. My upside target is $36.00 by end of October.
To learn more about John Person, please visit PersonsPlanet.com.
