Just to illustrate a point made in this morning's post: Even as the S&P 500 Index has struggled to hold the upside in recent sessions, the homebuilder stocks have been outperforming, rising nearly 2% today. Above we see the relative strength of the homebuilders ($HGX) versus $SPX; note how relative strength has been on the upswing since the mid-July lows. News coming from the housing market has hardly been positive, but the homebuilder stocks seem to be looking beyond the current weakness. The rise in fixed income prices--the 10-year Treasury yield fell below 3.7% today--would seem to suggest economic weakness and a flight to safe yields. All the more interesting, then, that we're seeing relative strength among consumer discretionary and housing issues.
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2 comments:
I've also noticed that yesterday's winners are today's losers (fertilizers, materials, and energy). I have found that this type of rotation is not typically the best for my trading results. I can still make money, but profit goals are smaller, and so is my expectancy. The real test for traders is how they perform and adjust when the environment is not
supportive of their system.
Hi itrade4real,
Great point; it's when your ideas *aren't* working that you get to see how good a trader is at managing trades and risk--
Brett
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