Jesse Livermore once said don’t become bearish or bullish on the whole market because one stock or sector has reversed its course from the general trend. The reason I bring this up is because I was reminded of a valuable lesson this weekend.

For the past year, I’ve been greatly focused on the Semiconductor stocks and the Nasdaq 100 Index. Respectively, they have been the leading sector and the leading index since the Bull Market resumed in July 2016. Over the past 3-4 weeks, they have both come under a decent amount of distribution (professional selling by the big institutions). Because I’ve been so focused on these two areas, I lost track of how strong some other groups are performing. In other words, the vicious sector rotation has taken money out of these areas and moved it into other sectors such as Financials, Transports and Healthcare.

Every weekend, I perform a thorough screen of the entire market and look at close to 1,000 stocks. While going over my screens this weekend, not only did I notice the strength in many other sectors, I also realized how the major indexes pulled back on light volume last week. The Russell 2000 in particular looks very strong; showing me there’s still risk appetite from the large institutions.

I still think it’s worth being a little cautious right now, but I was reminded this weekend not to get too bearish because one sector is consolidating or correcting. I discuss this in more detail in my Second Half Outlook which will be ready later this week. If you would like to receive it, sign up for my FREE mailing list below. Thank you!

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