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Katie Stockton
Fairlead Strategies
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Where they stand
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Stockton says the Nasdaq 100 took out short-term support (50-day MA) last week and the 50-day is rolling over; the next real support is ~8-9% lower, and consolidations resolving downside bring volatility 'we're bracing for.'
“that does increase downside risk because the next support is pretty well below 8% or 9%.”
Stockton defines ~7340 (50-day MA plus her cloud model) as the S&P 500's equivalent support; a breakdown from its 'coiled' consolidation 'would probably be a drag on just about everything,' prompting top-down hedging of high-beta.
“We're putting that level right around 7340 for the S&P 500.”
Stockton says downside leadership is localized to semis/AI, the AIQ ETF is down ~19% from its high near additional support, and momentum loss began in June with SK Hynix and Micron the biggest weights.
“we're looking for maybe a few days of stabilization that could give people a chance to kind of regroup and decide which names they might want to reduce exposure to as they bounce.”
Stockton points to rotation out of semis into software and defensives; REITs 'trying to break out,' good technical setups in healthcare, REITs, utilities, and 'very strong' relative insurers with many bottom-up breakouts.
“there are even still breakouts underway in some defensive areas of the markets. Even the REIT sector looks like it's trying to break out.”
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