Last weeks price action was insane, not normal, scary and I hope it’s close to being over. If this was normal no one would invest in the markets.
The media has been trying to figure out what is causing the extreme volatility. Maybe they will figure it out someday…maybe. I think the Unicorns did it.
The speed of change was what surprised me. On Friday the Dow moved from down 500 to even in less than 30 minutes. It took 10 days of trading to lose 47 days of gains in DIA, the ETF for the Dow.
Dow Jones Industrial Average ETF (DIA) daily
But, we must also compare last weeks price action to the recent up move from November last year (see yellow trend line) to just a week ago Friday. That move was an annualized return of about 64%; clearly unsustainable. One would expect reversion to support a lower rise of price but just not this fast.
So, now what?
Buy, Sell or Hold?
SPDR’s S&P 500 Trust Series ETF (SPY) daily
Hold.
Power Shares QQQ Trust Series 1 (QQQ) daily
Hold
SPDR’s Select Sector Technology ETF (XLK) daily
Hold
Global X Social Media Index ETF (SOCL) daily
Hold
Facebook Inc (FB) daily
Hold
Schwab International Equity ETF (SCHF) daily
Hold
SPDR EURO STOXX 50 ETF (FEZ) daily
Hold
iShares Core MSCI Emerging Markets ETF (IEMG) daily
Hold
iShares MSCI China Index Fund (MCHI) daily
Hold
SPDR’s Select Sector Health Care Sector ETF (XLV) daily
Hold
SPDR’s Select Sector financial ETF (XLF) daily
Hold
Intel Corp (INTC) daily
Hold
Goodyear Tire&Rubber Co (GT) daily
Hold
Express Scripts Holding Co (ESRX) daily
Hold
Freeport-McMoran Inc (FCX) daily
Hold
Morgan Stanley (MS) daily
Hold
SPDR’s Select Sector Energy ETF (XLE) daily
Hold
iShares Goldman Sachs Natural Resources Index Fund ETF (IGE) daily
Sell
Guggenheim Solar ETF (TAN) daily
Sell
KBR Inc (KBR) daily
Hold
While everything seems to be an ugly mess I do like the looks of Apple Inc (AAPL). Note that support, the green trend line, has not been violated on a weekly closing basis.
Apple Inc (AAPL) weekly
Maybe AAPL will get support in this area and lead the markets higher. I will be watching.
Considering the highly unusual price action I’m led to believe this might be overdone and I do not want to overreact.
When in doubt, widen your perspective…just not too wide.
Trade Smart,
Don