By Barbara Kollmeyer, MarketWatch
AFP via Getty Images
After Wall Street stocks closed out last week at record highs, a breather seems to be in store.
Investors appear cautious on Monday after violence ramped up in Hong Kong (see below) and President Donald Trump spoke of slow trade-talk progress over the weekend. Of course, it would only take a positive trade-related comment or two to jump-start equities again.
Meanwhile, talk is starting to make the rounds of a so-called Santa rally that has typically—but not last year—powered gains at the end of December. Our call of the day from Miller Tabak + Co.’s lead strategist Matt Maley, says if you want to know if equities have some juice left this year, look to one bullish sector for clues.
“At its highs from last week, the SMH semiconductor ETF /zigman2/quotes/200571902/composite SMH +1.48% [VanEck Vectors Semiconductor ETF] closed 7.8% above its old record highs, so that definitely qualifies as a ‘meaningful’ breakout,” said Maley, in a note to clients. That last bit refers to when a stock moves up—in this case, as it can also be down—after a period of moving sideways.
Maley said chip stocks are starting to look a bit overbought, meaning a decline may be on the horizon, though that would have to be severe before it becomes a problem.
And if those stocks follow that with yet another higher-low/higher-high sequence—technical moves that indicate a stock or group of stocks are headed up—it “will be very bullish for the entire stock market,” says Maley.
Bond markets are closed because of the Veterans Day holiday, which means no economic data. Dow /zigman2/quotes/210598065/realtime DJIA +1.09% , S&P /zigman2/quotes/210599714/realtime SPX +0.95% and Nasdaq /zigman2/quotes/210598365/realtime COMP +0.95% futures are down, along with European stocks /zigman2/quotes/210599654/delayed XX:SXXP +1.08% and oil .
Asia stocks fell across the board, led by the Hang Seng Index /zigman2/quotes/210598030/delayed HK:HSI +1.07% , shown in our chart of the day, after Hong Kong police shot an antigovernment protester amid escalating violence.