![[Gamma] Scalping Please](https://ibkrcampus.com/wp-content/smush-webp/2024/04/tir-featured-8-700x394.jpg.webp "[Gamma] Scalping Please")
By J.C. Parets & All Star Charts
Tuesday, 21st February, 2023
1/ Oil Services Lose Support
2/ The German 10-Year Yield Nears Multi-Year Highs
3/ Industrials Outperform
4/ Bulls Begin to Replace Bears
Investopedia is partnering with All Star Charts on this newsletter, which both sells its research to investors, and may trade or hold positions in securities mentioned herein. The contents of this newsletter are for informational and educational purposes only, however, and do not constitute investing advice.
1/ Oil Services Lose Support
U.S. equities led the way lower today as selling pressure gripped the markets.
As you can see, the Oil Services ETF (OIH) failed to hold its recent breakout and returned to its former range.
As shown in the lower pane, momentum (as measured by the 14-day RSI) has been waning as of late. This resulted in a bearish divergence as price reversed at a critical level of interest.
Seeing this cycle’s leaders fail at such a critical level suggests buyers may need more time to absorb the overhead supply before we can get a decisive upside resolution.
2/ The German 10-Year Yield Nears Multi-Year Highs
Global yields are on the rise again.
Today, the yield on the 10-year U.S. Treasury note hit its highest level since last fall, while its German counterpart could be poised to print fresh multi-year highs.
Here is a daily chart of the German 10-year yield:
The rising interest rate environment remains intact and is a global phenomenon.
If European benchmark yields begin to register new highs, it could only be a matter of when, not if, U.S. yields do the same.
Higher yields translate into selling pressure for bonds and other long-duration assets such as growth stocks. So far, growth areas of the market have been relatively unscathed from the effects of rising yields. But that could quickly change.
3/ Industrials Outperform
After trading in a sideways range on a relative basis for over two years, industrials are on the verge of reasserting their leadership role relative to the overall market.
The chart below shows the Equal Weight Industrials (RGI) vs. Equal Weight S&P 500 (RSP) ratio emerging from an extensive base to new 14-year highs.
As long as this ratio holds above the shelf of former highs, we could see continued outperformance from industrials.
4/ Bulls Begin to Replace Bears
After 45 weeks of bears dominating the AAII‘s weekly sentiment survey, bulls now outnumber bears for the second consecutive week.
Signs of burgeoning optimism reveal another constructive development for stocks, following one of the longest stretches of pessimism during the past twenty years.
You need bulls to have a bull market. The same can be said for new highs.
We’re already witnessing more stocks making new highs than new lows. If this trend continues to unfold, it could fuel rising optimism.
As bulls begin to replace bears, the path higher for stocks could become more evident and the uptrend more sustainable.
—
Originally posted 21st February , 2023
Disclosure: Investopedia
Investopedia.com: The comments, opinions and analyses expressed herein are for informational purposes only and should not be considered individual investment advice or recommendations to invest in any security or to adopt any investment strategy. While we believe the information provided herein is reliable, we do not warrant its accuracy or completeness. The views and strategies described on our content may not be suitable for all investors. Because market and economic conditions are subject to rapid change, all comments, opinions and analyses contained within our content are rendered as of the date of the posting and may change without notice. The material is not intended as a complete analysis of every material fact regarding any country, region, market, industry, investment or strategy. This information is intended for US residents only.
Disclosure: Interactive Brokers
Information posted on IBKR Campus that is provided by third-parties does NOT constitute a recommendation that you should contract for the services of that third party. Third-party participants who contribute to IBKR Campus are independent of Interactive Brokers and Interactive Brokers does not make any representations or warranties concerning the services offered, their past or future performance, or the accuracy of the information provided by the third party. Past performance is no guarantee of future results.
This material is from Investopedia and is being posted with its permission. The views expressed in this material are solely those of the author and/or Investopedia and Interactive Brokers is not endorsing or recommending any investment or trading discussed in the material. This material is not and should not be construed as an offer to buy or sell any security. It should not be construed as research or investment advice or a recommendation to buy, sell or hold any security or commodity. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.
Disclosure: ETFs
Any discussion or mention of an ETF is not to be construed as recommendation, promotion or solicitation. All investors should review and consider associated investment risks, charges and expenses of the investment company or fund prior to investing. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.
