Where's the Momentum
Everyone is looking at the price action of the indexes for a clue if a correction is coming. The problem with this approach is that the indexes are lagging indicators.
The biotech ETF which was among the first ones to break out the lead this rally in October is now among the first ones to break below its 50-day moving average. 89-90 is a huge level for XBI and if it doesn’t hold, we might be in for a lot more volatility.
Of course, this might be just another sector rotation. On Friday, we saw enterprise software stocks showing clear relative strength. MDB, TWLO, EVBG, PLAN and others were green in an ocean of red. It can be due to the strong earnings report from Atlassian (TEAM) or it can be because of a bigger industry-wide reason. We will know soon enough.