September 29, 2021, 4:35 pm EDT
Technology Under Pressure
When the technology focus Nasdaq index is under selling pressure as we pointed out yesterday, it spells out a cautious signal. Furthermore, defense sectors rose quickly today as shown. Defense sectors included Utility, REIT, consumer staples, and healthcare sectors.
The reality is that all major indexes (DJIA, S&P 500, Nasdaq) are below their corresponding 50 day-moving-average lines after reached recorded highs three weeks ago. If we look at the big pictures, stock markets lost short-term (days) and medium (weeks) trend upside momentum in just a couple of weeks. It could be a normal pullback or it could be a top-out for the longest bull cycle since March 2009.
At this moment, it is impossible to know which scenario is the right one. But, scaling back from aggressive mode is the right strategy to protect the portfolio from the worst scenario.
It means to stay less frequent trading and keep a balanced portfolio with a mix of offensive and defensive positions. Trimming down weak positions is another reasonable action to avoid a bigger loss if the markets keep falling in a short period.