ROTATION, ROTATION...

Rotation has been the theme this year for sure. Now its rotation out of FAANG (and high performers on the year) and into banks, financials, and ENERGY. FAANG is 8% off its July highs and this week it broke the neckline in a Head and Shoulders formation which is a negative technical pattern. FAANG relative to SPY has also settled below the October significant high in the pair and the July 3rd low. No momentum to speak of here yet, and we will have to see if FAANG continues to under-perform near term and extend this break...

FAANG is still up +25% on the year (NFLX is up +45% ytd) and the rotational plays have not lasted very long throughout this year, but concerns are what will investors do if their biggest gainers start to weigh on the overall market for a more extended period?

KWEB is the China Internet ETF and it is up more than 61% ytd (as is NVDA). KWEB has used its 50dma earlier in the year as pivotal support and is currently testing its 50 day now. If this breaks we will be on guard for potential for overall high flyers to see some real profit taking.

With the US$ Index lifting above it nearly yearlong descending trend line Emerging Markets Index is leaking and it too is testing its 50 day moving average which has been very pivotal support this year.