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Thursday, September 10, 2026

Summer Wrap-Up: Post Labor Day View: Light Volume, Heavy Rotation - Part II

 I gave a way a lot in yesterday's update -  Summer Wrap-Up: Post Labor Day View: Light Volume, Heavy Rotation (Part I) - covering 8 sectors + the $VIX.  That was before yesterday's mid-morning breakout on the $VIX, along with several more important observations:  

Firstly a couple quick corrections:    

1. I was right about the sell-off starting in Europe, but Claude (AI) flagged my tweet calling HSBC "Chinese owned". I still had questions: 


Gemini (google AI) confirms:  "HSBC is a London-based bank with a Hong Kong and Shanghai logo because of its colonial history and global corporate restructuring. 

Although HSBC is headquartered in London today, it was originally founded in Hong Kong and Shanghai in 1865." 
I did not know corporate logos were a thing back in 1865, but I also did NOT know, Hong Kong was legally and practically a British colony for over 150 years. And that concludes today's history lesson.
2. I claimed financials and biotech were still leading the bull market, but that was last week's news. In fact healthcare & Biotech, is getting absolutely pummeled, and financials are on a 3 day losing streak. I'm still getting caught up after last week's road trip - try to keep up with me. I actually sounded the warning last week saying: How long can rotation trades continue to fuel the broader rally? Not much longer, I'm afraid [link to the August 22nd blog]. 

On to for more important things 
$SOXL - called out yesterday:   $SOX was sold at the 50 day SMA. You should already know that. If I had to guess I'd say it could break out, but don't ignore the algos.  


More *Broadening Rotations [Unwinds] = More Broken Charts  

In hindsight while they were levitating the market using the usual magic act (driving MAGS - including the only stocks that really matter ($NVDA, $AAPL, MSFT) higher, they were quietly unwinding the software-maggedon squeeze. Just as the msm told you the coast was clear?  

You'd have to be living under a rock not to catch the August short squeezes, but what may have flown under your radar (pun intended) is the great unwind in Aerospace (including Wall Street darling $GE - the one to watch) - and Airlines. 

$GE - trend technically broken, but seeing some machine buying at the 200 day SMA. 


Are stocks selling off in a panic? No. Just another - sleight of hand - rotation. 
BUT EUROPE IS IN DEEP TROUBLE: 
This isn't an opinion - it's based on the recent flight to hard assets in Europe, and the fact that the $FEZ (the European banking sector) just had the rug pulled below the 50 day sma. 


Breaking: ECB just rated a quarter point as expected. Here in the US we're still watching the 50 day on the $SPX, and a Federal reserve that reports next week. 
$VIX level to watch is the 50 day moving average - right where yesterday's breakout occurred. 
CNBC is seen fanning the flames:   

 

 As I pointed out yesterday: it's a complicated market and more bifurcated than ever. I obviously can't micromanage 15 things at once, so all I can tell you is to watch the moving averages, and follow my timeline. Good luck

*Broadening rotation refers to a made up term - Morgan Stanley - which we covered in a previous blog [linked] - section title - The Rotation Hustle, Confirmed By Morgan Stanley's Own Word Salad Chef - Mike Wilson  


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Wednesday, September 9, 2026

Summer Wrap-Up: Post Labor Day View: Light Volume, Heavy Rotation

Light volume continues to dominate this week, but that didn't stop fund managers from dumping European equities overnight. 

The talking heads are blaming higher crude oil prices, HSBC quietly let the cat out of the bag:
  That's dragging on US futures, not a retest of the recent highs in oil. 


Rotation trades that continue to work: 

1. Energy - continues to break out to new all time highs. 
2. The rigged on light holiday volume $SOXL trade in semiconductors. I spotted this one coming from a mile away, but sadly I had to cut my gains short, because I was trading while on a road trip. 

3. Financials - government protected (still making slightly higher highs). As long as the $VIX continues to be beaten - like a rented mule - that can continue. 


4. Healthcare/ Biotech was leading... until yesterday morning. 

Compare That to A Multitude of Trade That Are NOT Working 

Starting With Gold Miners: August 30th I was calling the sell-off in Gold, and gold miners "overdone", and low-and-behold we caught a nice bounce - going into last Thursday's closing bell - exactly where I sold the rip. We saw a sharp pullback on Friday, but buyers rushed in before I could buy the dip. I think we could see another bounce this morning, as the mad rush for hard assets continues, but I wouldn't be caught dead in this trade. Consider this a warning, after the trade suddenly fell flat on its face... Play with fire, and you're liable to get burned.  

Tech stocks: Doesn't matter if you call them Mag7, or AI Hyperscalers,  
FOMO buying in big tech/ AI names is dead. Don't forget Dow Technology stocks $DJUSTC rallied over 100% - April 2025 - June 2026, and still need to correct. When, who knows? Sell Rosh Hashana, buy Yom Kippur, NEVER seems to work as planned. Will this time be different? Probably not.        

Don't Confuse Whipsawing Markets with a Bull Market  

Case in point $ARK - I called out this trade back in Feb. [link] - holds lots of Tesla, $SPCX (Musk bets), Coinbase, $HOOD ( recently lifted by the snap-back rally in crypto). The pattern clearly shows the price action whipsawing in a broadening triangle pattern - still trading below the 2025 high.  

I trolled Kathy Wood early this morning: Basically told her to sell her own fund. 
Nobody trades that junk, but it's a perfect example of why I like to dissect funds into each of their individual components: The chart confirms that the entire late summer rally was driven on the heels of yet another speculative rally in trash - including crypto. That's not a bull market. 

But Not Only Crypto & AI: 
Several markets continue to whipsaw, and retest the April highs, but at the end of the day stocks remain trapped in a range. I still think we're still on track for a sharp correction, and 4 months sideways action - on light summer volume - doesn't change that. The April 2025 rally was overdone, and the April 2026 rally, even more so. 

Continued Lack of Leadership 

Tech (minus $NVDA) no longer leading. $FNGS, even $NYFANG continues to trade at Memorial Day levels. 





The market is more bifurcated than ever, and even agriculture has joined the rotation party. That's a hell of a lot for the average investor to wrap their head around. 

As I said: Volume is light, and that makes predicting the near term, nearly impossible. Hopefully we get some more clarity, once the adults return to the table. Looking ahead to the next FOMC meeting - Sept. 16th - 1 week from today. 

In the meantime: I'm watching crude oil trading with the $VIX. IF (big if) Trump convinces Russia and Ukraine to agree to even a temporary cease fire, the whole fear trade is bound to suddenly unwind - just ahead of the midterms. 
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