Markets really impressed me Wednesday as they hit hit lower twice today and still fought back. That tells me the bulls still have some fight in them. Again it was the Russell 2000 and Nasdaq that led today, becoming a nascent theme and a good one, higher by .8 and .3% respectively. The Russell 2000 tends to be streaky when it has energy, with a 15 session winning streak in November ’16 and it rose 15 of 18 last October too. The S&P 500 is creeping up on its 50 day SMA and the Dow CLOSED 300 handles off its intraday lows. The VIX is now on a 4 day losing streak and looks ready to test its 50 day SMA for the second time in 7 days, and the more that line is touched, in my humble opinion, the more likely it is to break. The very round 20 number is now becoming a thorn in its side. Gold was looking as if it was constructing a nice double bottom base after yesterdays break above its 50 day SMA, but todays move just back below the 50 day after one day above dampened the prospect.
Looking at individual groups there was some big separation between the leaders and laggards with technology and healthcare gaining ground and they were pretty good actors even as the markets sold off hard early in the session and again around lunchtime, only to CLOSE firm. The XLK and XLV advanced higher by .5%. The XLK is now on a 4 session winning streak, although volume has dropped with each successive day and it is grappling with former highs made in late January. Weakness was seen in the staples and energy group and it is another example of whats in motion tends to stay in motion, both to the up and downside. The XLE was lower by .7% Wednesday, and this ETF is very heavily weighted with XOM and CVX comprising almost 40% of the fund. It obviously did not help to see XOM trading so fragile now 17% off most recent 52 week highs and the 2 weeks ending between 2/2-9 fell more than a combined 15% and today looks like it broke below a sloppy flag. Nothing to do on the investment side here, but just an observation.
They say a rally is not for real unless the financials are participating. They are the third best performing S&P sector YTD up nearly 3%, behind just discretionary as retail has made a comeback and technology with the XLK up more than 7% thus far in 2018. Below is the chart of MC and how it appeared in our Friday 2/23 Game Plan, and importantly it has solid acting peers in PJC and OPY to name a few (PJC was stopped cold at the very round par number the first couple days in February but looks ready to reclaim its rising 50 day SMA). Talking about the very round numbers MC is looking to record a ninth consecutive weekly CLOSE above the round 50 figure. Its chart trades very taut and it has not CLOSED underneath its rising 50 day SMA in six months now. Take advantage of any weakness back toward to 50 day SMA to accumulate shares.