While the Nasdaq 100 made new all-time highs today climbing over 20,000, all the Mag 7 talking heads cheered! And as they should. After all, it’s been all about growth stocks for years and every dip has been a buy. Our quant models are happy. Momentum trading has paid off for our clients in an almost surreal way. However, in Trump’s America, the market broadens out. He sees an increasing presence of US manufacturing and mining. He does not see Apple (AAPL) and Google (GOOGL) as the economy’s saving grace. He sees a strong consumer and small businesses thriving. The buzz is American Exceptionalism. So yes, let’s cheer for Amazon (AMZN), Microsoft (MSFT), Google and Nvidia (NVDA). But, unless the market continues to broaden, we can almost take the Mag 7 stocks outperforming as a lack of confidence in Trumps vision. Unless small caps can deliver. The CPI report is a factor as well. The Mag 7 stocks are basically inflation proof, to a point. And gold told its own tale today, clearing $2750 Small caps, however, firmed but well underperformed. 
The IWM weekly chart is not bad looking. Don’t get me wrong. Three weeks ago, IWM made a new high at 244.98. Since then, we have seen a $9 correction with today’s action flirting with the closing levels of last week. Yes, IWM outperforms SPY. Real Motion though shows us that until the 50-DMA clears back over the 200-DMA, IWM has meh momentum. Granny Retail XRT is consolidating at the higher levels, so that helps. But Transportation IYT closed red. So, what’s it going to take for the market to broaden and put Trump’s promise into fruition? The Fed lowering rates will help, however, that could trigger higher commodity prices. Inflation is a concern as the yields began softer and ended the day higher. This is a delicate dance. Yay growth, but we need confidence in inflation behaving, the US debt decreasing and Trump delivering on the Made in America notion. We can muse of course, but if indeed IWM clears 245 and doesn’t look back, I’ll play.
ETF Summary (Pivotal means short-term bullish above that level and bearish below) S&P 500 (SPY) 604 pivotal support Russell 2000 (IWM) Need to see 239 clear and hold to beat last week’s close Dow (DIA) 445 pivotal Nasdaq (QQQ) 520 support Regional banks (KRE) 65 support 70 resistance Semiconductors (SMH) 250 resistance 240 support Transportation (IYT) Unconfirmed Caution Phase-watch Biotechnology (IBB) 140 support 144 resistance Retail (XRT) 80 support 87 resistance iShares iBoxx Hi Yd Cor Bond ETF (HYG) 79.50 pivotal More By This Author:Turnaround Tuesday: 3D Printing, Finally
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