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FAANG vs CHIPS

09-11-2018

Today's action was on the volatile side, in that the SPOOs were weaker overnight to the tune of about 0.5%, but after opening around those levels the market basically went straight up, led by the FAANG group and a few other momentum names, while the chip sector was under pressure. (For what it's worth, I think chip land is a better leading indicator of where we are headed and the FAANG is more of a last gasp.)

By midday the indices had gained between 0.5% and 0.75%, depending on which one you were looking at, and that is about where they were with an hour to go, when I had to leave.

Away from stocks, oil gained 2.5% (I assume on hurricane concerns), fixed income was weaker, and green paper was stronger. The dollar action initially had the metals weaker, with silver losing 1.5% to gold's 0.75% before they rallied to get back to about unchanged. As for the miners, they were under pressure initially, but were about flat when I left.

One Wrong Might Make It Right Given what I saw today, and it being Tuesday (when the snapshot for the Commitment of Traders report is taken), I suspect that on Friday we will see that the commercials increased their longs. And while that doesn't determine the timing, it is undeniably bullish. As a friend of mine says, who has been in the business for over 20 years: It just tells you it's the "wrong" price.

That's not to say the metals can't get weaker or stay here for a while, but it's a rather strong sign that the downside is on borrowed time, even if it's another week or two, and we visit slightly lower prices between now and then. Having said that, today's reversal may have been significant, and while I took no action, I'm on red alert to do so.