No Trades Today
I didn't trade today for two reasons:
- No entry for Amazon or Google looked good after the 30 mins
- I realized my analysis wasn't well thought out
The great news is, that the overall market didn't have its best performance, so I preserved capital today as opposed to blowing it up. Let's take a look at today's market performance:
As shown above, we see all the indexes end up negatively after closing hours. The only strong sectors were Energy, Health Care, and Utilities. It's also interesting that VIX increased by almost 2% today, not drastic, but it still correlates with the performance of the indexes.
As mentioned yesterday, I will continue to monitor SPY in the background for a week or two until I feel confident. So here are my observations:
In the above chart, when overlaying XLK with SPY, we see that XLK had a lower performance in comparison to SPY. The chart above highlights a -0.65% daily return for XLK whereas SPY had about -0.21% return. Overall, this tells us why SPY trended lower than it did yesterday.
Now, looking at XLK's performance:
| Rank | Symbol | Company Name | Fund Weight | Daily Return | Spread vs. XLK | Performance Status |
| 1 | NVDA | NVIDIA Corp. | 15.09% | $-1.04\%$ | $-0.50\%$ | Underperformed |
| 2 | AAPL | Apple Inc. | 12.21% | $+0.38\%$ | $+0.92\%$ | Outperformed |
| 3 | MSFT | Microsoft Corp. | 8.78% | $-1.44\%$ | $-0.90\%$ | Underperformed |
| 4 | AVGO | Broadcom Inc. | 5.57% | $-2.29\%$ | $-1.75\%$ | Underperformed |
| 5 | MU | Micron Technology | 5.22% | $+2.52\%$ | $+3.06\%$ | Outperformed (Alpha) |
| 6 | AMD | Advanced Micro Devices | 4.67% | $-1.65\%$ | $-1.11\%$ | Underperformed |
| 7 | INTC | Intel Corp. | 3.45% | $-3.12\%$ | $-2.58\%$ | Underperformed |
| 8 | CSCO | Cisco Systems Inc. | 3.20% | $-2.94\%$ | $-2.40\%$ | Underperformed |
| 9 | LRCX | Lam Research Corp. | 2.36% | $-1.65\%$ | $-1.11\%$ | Underperformed |
| 10 | AMAT | Applied Materials Inc. | 2.23% | $-1.61\%$ | $-1.07\%$ | Underperformed |
From the above table, the top 10 XLK holdings explain why XLK was down. 8/10 underperformed. Given that I am short on time, I will skip the analysis on the 1o holdings for tomorrow, but overall, if NVDA, AAPL, MSFT downtrend tomorrow, we can expect XLK to continue it's downtrend. At the same time, this would also drive the SPY downtrend.
Given that XLV and XLU were the best performers behind XLE, I will look at XLU
NEE
While NEE is underperforming in comparison to the 20 and 200MA the past month, when we zoom in, we see that today was a good performance against the entire sector. Certainly, the support was dragged down today to $86, but to be fair, most of the market was dragged down. Given that NEE outperformed XLU and went above the 0.00% baseline, I am inclined to exploring this as a trade tomorrow.
Lastly, XLV was gapped up the last minutes of the day, which is what put XLV up top. LLY specifically, being the heavier weight in XLV increased by ~$10 in the closing minutes. Tomorrow we can expect that price to drag down briefly, where sellers will collect profit.
I will tread carefully tomorrow, today the market was too red for me. Sales sure, but not ideal for trading for me.
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