Markets registered decent intraday reversals Wednesday and it was the Nasdaq that put in the best effort. After Tuesdays bearish action it was pleasant to see, and the tech heavy index is now digesting the nearly 4% advance the two weeks ending between 5/4-11 very well. The handle on the Nasdaq cup base has a much better complexion after todays and it can also be viewed as a bull flag now. A move and CLOSE above 7425 could ignite a measured move of 425 handles. There were moves of 3% plus in several Nasdaq 100 names that contributed handsomely to tech dominance including NFLX, CTRP, ALGN and MELI. The VIX reversed hard after an intraday push above its 200 day SMA, which is still sloping upward. Looking at some “risk on” ETFs the JNK is starting to coil and it could be telling us something. A look at the Bollinger Bands on this ETF shows a squeeze developing as the bands are as tight as they have been in all of 2018. Will it thrust the most hated bull market even higher?
Looking at individual groups there was some disparity among the major S&P sectors. Leadership today was somewhat suspect as the utilities rose with the XLU higher by .9%, and so far for the week headed into Thursday it is a clear winner up nearly 2%. Not far behind bulls welcomed the sight of the cyclicals and technology acting well with the XLY and XLK higher, both by .7%. Retail names were the main reason the cyclicals did well, as LOW reported a number that put the stock up more than 10% and clearing the very round 90 number which set it back a couple of times since falling below the figure on 2/28. TIF shined more than 23%, pun intended, hitting all time highs. RL added more than 14% and has now doubled since the first week of June last year. Anyone remember the phrase “Amazoned” as it related to the death or retail? Acting poorly Thursday were the financials as the XLF lost .7% and we speak of its chart in the next paragraph a bit.
The financials have been in the news plenty of late with the talk of interest rates and their overall lack of vigor recently. The XLF has fallen 6 of the last 9 sessions after a failed bull flag breakout on Wednesday. Flying under the radar in this diverse space has been the strength in the investment banking advisory names. Below is the chart of EVR and how it was presented in our Thursday 4/26 Game Plan. This name sported a double bottom trigger just underneath the very round par figure, in a base that began with a bearish evening star completed on 2/2 at all time highs. Since the breakout on 4/25 it has acted very well, and we know the best breakouts tend to work out right away, advancing 17 of the last 21 days. It is always a good sign to see peers acting well in the sector and one has to look no further than MC, which since the start of April has declined just NINE times as it traded from the very round 50 number to where it is having some issues with the 60 numbers currently.