Stock Market Leaders at Exhaustion
Many stock market leading sectors are suffering exhaustion, and have been held up for distribution.
Previous Post: A leading SPDR sector looks to roll over
The SPDR Health sector is showing exhaustion at the end of the trend, the 'Effect' as exhausted itself. It has been a dream run, many large players have banked healthy profits.
The question now is the current consolidation one of distribution or accumulation? Can we expect another run up from the building 'Cause'?
So far prices have been held up to sell into, as most of the volume is net selling. Yes prices are still high after this distribution (absorption), and it may mean we shall see another run to all time highs on the XLV for more selling into the up swing. To determine if the next swing up is strength and a break out for this sector will require careful judgment as to the quality of the strength behind the move. Remember the composite man can move the market 10% to 15% just to trick you, and remove you from you hard earned cash.
POINT: Not all moves to higher highs should attract new investment, some can call these moves a bull market trap, or fake break out. It is election year folks and the stock market is being used (incorrectly) as a measure of how healthy the economy is for the common man. Obama and Biden have already met with Yellen and placed there order in for 'all is well', raise rates to prove economy and markets are 'all ok'. (Consider this).
Wyckoff PnF analysis shows this sector leader and the wider market is exhausted.
Here is a question from Barrons:
Short Answer: The smart money want to distribute their stock float to the dumb money, and they are not done yet, maybe another all time high on the SP500 to sucker them all in, just one more time.
Plus Obama and Biden have already ordered Yellen to allow no crashes until after the election.
"It is impossible here to give an adequate idea of the Law of Vibration as I apply it to the markets. However, the lay man may be able to grasp some of the principles when I state that the Law of Vibration is the fundamental law upon which wireless telegraphy, wireless telephones and phonographs are based." ~ William D Gann
"It is much harder to sell stocks correctly than to buy them correctly." Because of the emotional aspect of trading, if a "stock went up, the average investor would hold because he wants more gains - he's exhibiting greed. If the stock declines, he also holds on and hopes the stock will come back so he can at least sell and break even - he's hoping against hope." ~ Bernard Baruch
"It is better to have few stocks and to watch them carefully." ~ Bernard Baruch
"The minute you get away from the fundamentals - whether it's proper technique, work ethic, or mental preparation - the bottom can fall out of your game." ~ Basketball Legend Michael Jordan.
"Wall Street is the only place that people ride to in a Rolls Royce to get advice from those who take the subway." ~ Warren Buffett