Side by Side

Gearald M. Loeb, late Vice Chairman of E.F. Hutton, said it himself (paraphrasing).

‘If you don’t know what you’re doing (in the markets), you diversify.’

The professionals tend to have highly concentrated positions (not advice, not a recommendation).

With that, let’s look at how two markets have fared during the recent downside reversal.

SOXX & XBI, Daily, Side-by-Side

If you were to position short, which would you choose?

The decline is shown from the exact start-point (Trump ‘bump’) for each market.

Biotech declined -16%, semiconductors, only -10.5%.

More importantly is the rebound (thus far).

Biotech is extremely weak, with only a 23.6% retrace off the lows. Semiconductors have launched all the way back to a 68% retrace.

Why waste time and capital (and increase risk) on a market that’s not moving lower, as quickly as others?

Stay Tuned

Charts by StockCharts

Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

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