The tone of the market sure did change over the last two weeks!  The image below is from our Trend Analyzer screen of US indices as of the close two weeks ago on 1/17.  Heading into that weekend, the major US averages were all at ‘Overbought’ or ‘Extreme Overbought’ levels, and while their Trend ratings were all positive, the Timing scores for nearly all of them was ‘Poor’.

Fast-forwarding to the present, it’s a completely different picture for the major US indices. Today, not a single one of the major US index ETFs headed into this weekend overbought at overbought levels, and a few of them are even oversold.  Here’s the silver lining, though; since all of their Trend ratings are still positive, their timing scores all rank as ‘Good’. While not what we would classify as a ‘Perfect’ set up right now, for investors who have been waiting for a pullback, the window is starting to open. Start a two-week free trial to Bespoke Institutional for full access to our Trend Analyzer tool, so you can track the key trends of major indices and individual stocks.

Please click the image below to view our February 2020 market calendar.  This calendar includes the S&P 500’s average percentage change and average intraday chart pattern for each trading day during the upcoming month.  It also includes market holidays and options expiration dates plus the dates of key economic indicator releases.  Start a two-week free trial to one of Bespoke’s three research levels.

It was just a week ago that the Philadelphia Semiconductor Index (SOX) gapped sharply higher to record highs on the back of strong earnings from Intel (INTC).  So much for that rally.  By the end of the day last Friday, the SOX was actually down over 1%, and outside of a rally this past Tuesday, it has traded down every day since.  From record highs on Friday morning, the SOX is closing out this week down more than 8% from last Friday’s highs and below its 50-day moving average (DMA) for the first time since October. For the last several months, the 50-DMA has acted as support for the SOX, so we’ll be watching closely to see how the index holds up in the days ahead.  We’ve repeatedly discussed the importance of the semis as a barometer of the health of the broader market, so it will be important for the group to find its footing soon.

In terms of the SOX’s individual components, the weakness has been broad-based.  Since its closing high on 1/23, every member of the SOX besides INTC is down, and INTC is barely up!  The average performance of the index’s components since 1/23 has been a decline of nearly 9%, and a third of the components are down by double-digit percentages. Semis had been a leadership group for the market as recently as last week, but after the declines over the last five trading days, the average 2020 performance of stocks in the index is a decline of 3.5% and only eight components are up. Even for the semis, this has been a quick reversal.  Start a two-week free trial to Bespoke Institutional for full access to our research and market views.