he Trump rally continues except for those in Silicon Valley who chose to back another candidate. Transportation stocks continue their rally as Buffet disclosed positions in airline stocks. Facebook (FB), Apple (AAPL), Amazon (AMZN), Netflix (NFLX), and Google (GOOG) continue to be sold in heavy volume weighing heavily on the Nasdaq and Nasdaq 100. To top it all off the bond mayhem continues as yields pushed higher again. Right now, this rally after the election needs some time to cool down. It would be great to see small caps consolidate their gains as well as the Dow. It has been a solid few days and with a little rest we can see this entire market push higher into the year end.

All-time highs in the Dow and Russell 2000 is not a bearish signal by any stretch of the imagination. We do have some extreme overbought readings on the Russell. It would not come as a surprise to see small caps consolidate over the next few days even the rest of the week. On the flip side the selling in the FANGs may halt for a few days. FB and GOOGL look especially bad given their moves below their 200 day moving averages. Institutional holders are fleeing the group and it can easily be seen with the amount of volume since last Tuesday. It has been interesting to see the winners and losers since the election and has paid to follow the winners.

Another winner from the election has been the US Dollar. The dollar index crossed above 100 or par yesterday. Perhaps it has more to do with rate hike odds for December jumping to 92%. Or for another unknown reason, but that does not matter as all we care about is the direction of price. As odds of a rate hike increase so do yields across the curve. 30 year yields moved above 3% yesterday. 10 year yields nearly hit 2.3%. In case you were wondering the earnings yield on the S&P 500 is near 5%. We have some ways to go before bond yields eclipse the earnings yield. The selling of bonds has been quite impressive and not something we have seen in a long time. We have seen some extreme moves since last week and it has been fun to watch.

What an interesting start to the week. We’d love to see some consolidation in Small caps and the Dow. Nasdaq 100 names need some support and begin carving out bottoming patterns. Otherwise, their current downtrends will continue. Cut those losses short! Have a great week.