What goes up must come down, and as in life we know gravity brings things down faster. The big three all posted exceptionally strong Januarys, but after the recent weakness they are all negative now on a YTD basis with the Nasdaq lower by .4% and the S&P 500 and Dow by 2 and 2.1% respectively. Markets finished a roller coaster weekly ride today avoiding a second consecutive Friday disaster. For the second time this week the major averages registered bullish reversals, but on a weekly basis the Nasdaq slumped 5.1%, and the Dow and S&P 500 lost 5.2% (today the S&P 500 kissed its upward sloping 200 day SMA). On January 26th it was reported global equities scored a record inflow, mostly into ETFs and then this morning was the news of record withdrawals according to Lipper, with data going back to 1992, again the most coming from ETFs, showing the recent affinity with passive investing. As we dropped 10% from recent all time highs this week, since 1980, there have been 36 10% corrections on the S&P 500 and a year after the lows, stocks are up a median of 23% and two years later up 36% (h/t Ryan Detrick). So there obviously could be more weakness in store, but keep your watchlist handy, for those are some nice longer term returns.

Looking at individual groups during todays topsy turvy session it was just what bulls want to see as technology led with the XLK rising by 2.5%. Interesting was the utilities which were the “best” actors during the week as one would think is the chaos, they thrived Friday too, the second best performing S&P sector with the XLU up 2.1%. They were followed up by the financials with the XLF up 1.9%, as the ETF recorded its second bullish candle in the last 4 days. It recorded a piercing line on Tuesday and a harami on Friday and notice volume was heavier than the session before. Friday also filled in a gap from 11/28/17. Energy which looked so promising not to long ago was the only group to fall today with the XLE down fractionally but is currently 15% off most recent 52 week highs. On a weekly basis it is hard to take away many positives as the best actor were the utilities losing 2.6%, and by far the worst performer energy dropped 8.1% via the XLE.

PRICE action is omnipotent. That is one of the tenets of technical analysis. And it is very important to monitor names where its price stands tall during market turmoil. Below is the chart of NEWR and how it appeared in our Wednesday 1/28 Game Plan. This week is displayed excellent relative strength gaining 8.5%, and some may say that it sprouted higher after a well received earnings report. That is true, and it holds more more credence as it seemed to be the theme this week that even good releases where punished so hats off to this stock. It now has put up back to back gains following earnings of 5.2 and 9%, a good sign. Notice it had some difficulty clearing the round 60 number, but with this weeks burst to all time highs treat it as a gift if you get the opportunity to enter on a gap fill from the 2/6 session. That happens to be just below the 60 figure which in all likelihood is now support, whereas it was former resistance.

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