By: Kent Engelke | Capitol Securities

Technology stocks sold off another 0.5%. Energy and financial shares were essentially unchanged. At a casual glance of the headlines, consensus thinks the tech selloff is only temporary as is the gain for energy and financials. I cynically ask is the above the result of an extremely crowded trade, for such remarks are expected and are typical following a selloff in a very widely held sector and conversely in an under owned sector?

Two days does not make a trend, for only history will state if a massive transition is/was at hand.

Commenting about oil, the EIA stated yesterday proven oil reserves fell again in 2016, the second consecutive year. Net reduction was 8.2 billion barrels year over year. Moreover, capital expenditures remain lower in 2017 as compared to the same period in 2016.

As noted many times, ex-OPEC, from September 2014 to December 2016, a record $1 trillion in infrastructure cuts were announced.

As per the research firm BI Commodities, crude oil demand is increasing versus supply at the highest velocity since the global financial crisis. Moreover the 12-month average ratio of IEA oil world demand versus supply is the highest since January 2014. The low occurred in February 2016.

Two weeks ago, Bloomberg wrote energy trades were at their lowest level relative to the S & P 500 in 14 years and represent the lowest capitalization in 18 years.

Conversely, technology is at record ownership and percentage of the S & P 500.

Bloomberg writes four of the six largest holdings of mutual and hedge funds are four household technology names.

More buyers than sellers are required to trade higher. It is evident everyone owns the same few companies. The energy alone to maintain the status quo — i.e. unchanged — is incredible.

What happens if selling commences in earnest? I vividly recall the 18 month NASDAQ implosion from 2000-2002 that crushed that index by 70%. In many regards today is that era on steroids, especially relating to the few number of companies involved in the advance.

What will happen today? Will the inflation data alter views of this week’s FOMC meeting?

Last night, the foreign markets were up. London was up 0.02%, Paris was up 0.38% and Frankfurt was up 0.47%. China was up 0.44%, Japan was down 0.05% and Hang Sang was up 0.56%.

The Dow should open quietly. The 10-year is unchanged at 2.22%.