It's only been a couple days since we last checked on the X sector model but there is an abnormal divergence forming between XLF (Financials) and XLK (Tech) that was given an extra goose with MSFT's 11% loss on Friday.
Our working premise is that bull markets are led by Financials and Tech, but with XLF in #3 slot and XLK in #9, we're not seeing the type of correlation alignment to foster market encouragement.
The FED chairman has shown that he can move the markets with just a nod of the head or a sideways wink and virtually all volatile and gap days have been the product of FED pronouncements....and their sometimes obscure interpretations by various market prognosticators.
As of this date we have a truly mixed bag to sort through in search of a risk managed portfolio.
All models are now vested with the RSQ and P6 upslope:
As detailed earlier this week the financials are looking GOOD...these guys know how to make money.
Tech is stumbling and it will be interesting to see the fallout from the MSFT drop next week.
Housing starts have suddenly cooled. In Southern California a red hot market now acts like someone hit the PAUSE button. Slightly rising interest rates have been cited as the likely culprit but in many markets housing prices have risen 20%-25% in the last year and we may have reached a buying plateau ... for now.
In responce we are keeping a close eye on the P6 and ready to switch to cash if it falters.