The S&P 500 gained for a third day in a row, increasing in value by 60 basis points. This is as money flowed into financials and discretionary stocks.
The heat map largely reflects the strength in both of these sectors, with most the stocks gaining with some volume support, especially in the financial sector. Despite this dynamic, the SPY continues to trades higher on lighter volume levels over the subsequent three days. Additionally, the SPY closed towards the low of the trading range in yesterday's trading. This suggests to me that the rally just a retracement of the downtrend, a function of operators pulling in money before another sell off. See the chart below the heat map.
I am noticing some interesting dynamics in the utility sector. although the group gained 20 basis points in yesterday's trading, the gains were focused in a handful of names. In contrast, the heat is showing general weakness in the sector constituent trading. This is as the XLU or the Utility Spider ETF is trading higher on lighter volume, again indicating a lack of support for the now higher price. We may just see XLU trade down another 10% or so, and in fact I think this is low risk short opportunity here. I will making some trades in the portfolios today.
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