Is there something happening?

Friday 12th April - Daily Equity Update

Low volatility lulls into a sense of security. Where small moves in the context of the last 3 months appear important, but in the last 3 years register as simply a blip.

Does that make them any less important?

Do blips mean more when there is a cacophony of nonsense going on in the background?

I don’t want to portray myself as some guru (or furu) that “knows” what is happening. I have no idea. I just want to lay out as best I can what is happening by sharing the numbers and not the narrative.

Was yesterday important? No idea.

Doesn’t look like much from the above perspective.

So what happened yesterday? We need to have a look at the last month or so and the divergence between SPY and QQQ. Better said we need to look at the divergence between constituents of IWM and QQQ and how they appear in the SPY.

From a signal strength perspective, large parts of Technology have been weakening for over a month.

This has been less apparent in Financials where the drop was more recent, and somewhere between the two lays Industrials.

Although QQQ has moved sideways the individual companies have moved lower. So any bounce was more likely to come in technology. Why it may have appeared out of the blue was unless you are heavily invested or looking at the individual moving parts you wouldn’t know they were at a level to bounce from.

When we combine our work to understand individual companies and their momentum with Tier1Alpha’s work on market structures impact causing outsized moves. The sector that has the largest impact on the index moved inside of an index that was relatively pinned. The high impact of technology only had so much space to act to push the index higher, therefore something else had to give.

Did we figure out an emoji for sideways?