Markets:

  • The Nasdaq rose for a fourth straight session Friday, and if it were not for Mondays 1.4% loss would have been a very solid week for the tech heavy benchmark. That being said it did advance 1% for the week and CLOSED above the 7800 number Thursday-Friday. That was the number where an ugly bearish engulfing candle was recorded on 6/21 at all time highs, so to see it pierce above for a second time so quickly is a good sign indeed. For a second straight time AAPL saw huge accumulation after an earnings report on a weekly basis rising 8.9% this week and 13.2% the week ending 5/4.
  • The Russell 2000 was the laggard Friday falling .5%, and its chart is beginning to have the feel of the XLE with both looking to be on the verge of big breakouts, but stalling near key levels. There is not much in common between the two, but the Russell needs to clear the 1700 number decisively. Do not get me wrong it has had a solid 2018 campaign up 9%, but since mid June has been making lower highs on the RSI. On a longer term timeframe however it must be given the benefit of the doubt, as it is still in the midst of an unorthodox bull flag with a breakout likely showing continuation of the prevailing trend.
  • The S&P 500 has the best look of the three major averages to me as it successfully retested the important round 2800 number and is sniffing out an add on buy point through a cup with handle trigger. On a YTD basis it is rapidly narrowing the gap between it and the Russell 2000 as it is now higher by 6.2% in 2018. Perhaps most meaningful is that this benchmark is holding the baton (value vs growth debate) while the Nasdaq and Russell 2000 take a well deserved breather as they look to make an energetic push in the third quarter into year end.

Sectors:

  • Friday witnessed two of the most defensive groups emerge as winners with the staples and utilities rising by 1.2. and 1.1%. The XLP is now on a 5 week winning streak, with four of them higher by 1% or more, and each week CLOSED at the top of its weekly range and each successive week was greeted with stronger volume. Eighteen of the top twenty holdings in the ETF advanced Friday, with one of the exceptions being EL. The former best of breed name is now LOWER 6 of the last 7 weeks and is now 15% off most recent 52 week highs. It finished the week under its 200 day SMA everyday this week, a line it had been above for the last 14 months. 
  • As one will most likely always encounter there was bifurcation on a weekly basis among the major S&P sectors. The best performer was healthcare as the XLV rose by 2.1% and the laggard was energy with the XLE falling 1.8%. The XLV rose everyday this week and is just underneath the very round 90 number, which it only managed to CLOSE above twice in 2018. The ETF has traded between 80-90, with just three CLOSES below 80 since the beginning of the year. A move through a 91.89 cup base trigger could provide a powerful breakout. PFE above its own round 40 number looks like a must own.

Special Situations:

The overall finance group is acting a bit better, but some names in the very diverse group did not get the lukewarm rally memo. While traditional banks JPM and FRC sit just 2 and 3% off their most recent 52 week highs, investment banks such as GS and MS are 15 and 16% off their most recent 52 week highs. Subsectors within finance that have been acting very poorly are investment service stocks. For example VIRT is lower 9 of the last 15 weeks and has been nearly sliced in half down 47% from its most recent highs and volume trends have been bearish. Below is the chart of CBOE and how it was presented in our Thursday 7/5 Game Plan. To be fair there was a 106 stop on the stock so one would exited as CLOSED 2 pennies above. However Friday it did slip below a bearish descending triangle pattern, which carries a huge measured move lower.

MOO nearing an entry point above a bullish ascending triangle. CF is a best in breed chemicals play higher by 15% YTD and 60% over the last one year period and sports a dividend yield of 2.4%. Earnings have been mostly higher with gains of 12.2, 3.1, 1.3 and 6.9% on 8/2, 2/15, 11/2 and 8/3 and a loss of 2% on 5/3. The stock is higher 12 of the last 17 weeks and this week rose by 10.3%. It acted well POST breakout from a cup with handle trigger of 42.68 taken out on 6/7 and successfully retested that trigger in its current cup base. Enter CF on a pullback into the recent cup base breakout trigger of 46.30 taken out on 8/2 at 48.25.

Trigger CF 48.25.  Stop 45.

Peers VALE and BHP pulling their weight too, a good sign. CLF is a materials play higher by 51% YTD and 46% over the last one year period. Earnings have made a nice turnaround with strong back to back gains of 12.7 and 7.4% on 7/20 and 4/20 after losses of 5.5, 5.6 and 5% on 1/25, 10/20 and 7/27/17. The stock is on a 3 week winning streak up by a combined 28%, and is acting well POST breakout from a flat base trigger of 9.18 taken out on 7/20. Enter CLF with a buy stop above a bull flag trigger of 11.10 which carries a measured move to 14.25. One can add to above a cup base trigger of 12.47 in a base that is 1 1/2 years long.

Trigger CLF 11.10.  Stop 10.50.

Recorded very impressive 14 session winning streak in July. IQV is a best in breed healthcare play higher by 26% YTD and 35% over the last one year period. Earnings have been mostly higher with gains of 6.3, 4.6 and 3.9% on 7/24, 2/14 and 10/26/17 and a loss of 1.1% on 5/2. The stock is on a 5 week winning streak, gaining more than a combined 20%. It sits just 2% off most recent all time highs, after a break above a long cup base trigger of 110.77 the week ending 7/20 in a pattern that began the week ending 11/10/17. Enter IQV with a break above a bull flag trigger of 124.75 which carries a measured move to 140.

Trigger IQV 124.75.  Stop 121.

Activist chatter, but has been acting well before that news came forward this week. IBM is a big cap tech play lower by 4% YTD and higher by 2% over the last one year period and sports a nice dividend yield of 4.2%. Earnings have been mixed with gains of 3.3 and 8.9% on 7/19 and 10/18/17 and losses of 7.5 and 4% on 4/18 and 1/19. The stock is higher 4 of the last 5 weeks and this week rose 1.8% after the prior 3 ending between 7/13-27 all CLOSED very taut within just 1.20 of each other. It is still 14% off most recent 52 week highs and filled in a gap from the 7/18 session. IBM completed a bullish morning star pattern Friday and enter on pullback into formation at 146.25.

Trigger IBM 146.25.  Stop 142.

Good news from a housing related name Friday was welcome news for a group in disarray. ESNT is a mortgage finance play higher by 4% YTD and lower by 8% over the last one year period. Earnings have been very positive with FIVE consecutive gains of 4.4, 3.6, 1.2, 1 and 4.3% on 8/3, 5/4, 2/9, 11/9 and 8/4/17. The stock is higher 6 of the last 10 weeks, including advances of 9.3 and 8.9% the weeks ending 6/8 and 7/20. Enter ESNT with a buy stop above its 200 day SMA at 41.30 and monitor the chart as it builds right side of cup base that began with a rejection at the very round 50 number the week ending 1/26/18.

Trigger ESNT 41.30.  Stop 38.

Good luck.

Trigger summaries:

Buy pullback into recent cup base breakout CF 48.25.  Stop 45.

Buy stop above bull flag trigger CLF 11.10.  Stop 10.50.

Buy stop above bull flag trigger IQV 124.75.  Stop 121.

Buy pullback into bullish morning star pattern IBM 146.25.  Stop 142.

Buy stop above 200 day SMA 41.30.  Stop 38.

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Markets:

  • The Nasdaq rose for a fourth straight session Friday, and if it were not for Mondays 1.4% loss would have been a very solid week for the tech heavy benchmark. That being said it did advance 1% for the week and CLOSED above the 7800 number Thursday-Friday. That was the number where an ugly bearish engulfing candle was recorded on 6/21 at all time highs, so to see it pierce above for a second time so quickly is a good sign indeed. For a second straight time AAPL saw huge accumulation after an earnings report on a weekly basis rising 8.9% this week and 13.2% the week ending 5/4.
  • The Russell 2000 was the laggard Friday falling .5%, and its chart is beginning to have the feel of the XLE with both looking to be on the verge of big breakouts, but stalling near key levels. There is not much in common between the two, but the Russell needs to clear the 1700 number decisively. Do not get me wrong it has had a solid 2018 campaign up 9%, but since mid June has been making lower highs on the RSI. On a longer term timeframe however it must be given the benefit of the doubt, as it is still in the midst of an unorthodox bull flag with a breakout likely showing continuation of the prevailing trend.
  • The S&P 500 has the best look of the three major averages to me as it successfully retested the important round 2800 number and is sniffing out an add on buy point through a cup with handle trigger. On a YTD basis it is rapidly narrowing the gap between it and the Russell 2000 as it is now higher by 6.2% in 2018. Perhaps most meaningful is that this benchmark is holding the baton (value vs growth debate) while the Nasdaq and Russell 2000 take a well deserved breather as they look to make an energetic push in the third quarter into year end.

Sectors:

  • Friday witnessed two of the most defensive groups emerge as winners with the staples and utilities rising by 1.2. and 1.1%. The XLP is now on a 5 week winning streak, with four of them higher by 1% or more, and each week CLOSED at the top of its weekly range and each successive week was greeted with stronger volume. Eighteen of the top twenty holdings in the ETF advanced Friday, with one of the exceptions being EL. The former best of breed name is now LOWER 6 of the last 7 weeks and is now 15% off most recent 52 week highs. It finished the week under its 200 day SMA everyday this week, a line it had been above for the last 14 months. 
  • As one will most likely always encounter there was bifurcation on a weekly basis among the major S&P sectors. The best performer was healthcare as the XLV rose by 2.1% and the laggard was energy with the XLE falling 1.8%. The XLV rose everyday this week and is just underneath the very round 90 number, which it only managed to CLOSE above twice in 2018. The ETF has traded between 80-90, with just three CLOSES below 80 since the beginning of the year. A move through a 91.89 cup base trigger could provide a powerful breakout. PFE above its own round 40 number looks like a must own.

Special Situations:

The overall finance group is acting a bit better, but some names in the very diverse group did not get the lukewarm rally memo. While traditional banks JPM and FRC sit just 2 and 3% off their most recent 52 week highs, investment banks such as GS and MS are 15 and 16% off their most recent 52 week highs. Subsectors within finance that have been acting very poorly are investment service stocks. For example VIRT is lower 9 of the last 15 weeks and has been nearly sliced in half down 47% from its most recent highs and volume trends have been bearish. Below is the chart of CBOE and how it was presented in our Thursday 7/5 Game Plan. To be fair there was a 106 stop on the stock so one would exited as CLOSED 2 pennies above. However Friday it did slip below a bearish descending triangle pattern, which carries a huge measured move lower.

MOO nearing an entry point above a bullish ascending triangle. CF is a best in breed chemicals play higher by 15% YTD and 60% over the last one year period and sports a dividend yield of 2.4%. Earnings have been mostly higher with gains of 12.2, 3.1, 1.3 and 6.9% on 8/2, 2/15, 11/2 and 8/3 and a loss of 2% on 5/3. The stock is higher 12 of the last 17 weeks and this week rose by 10.3%. It acted well POST breakout from a cup with handle trigger of 42.68 taken out on 6/7 and successfully retested that trigger in its current cup base. Enter CF on a pullback into the recent cup base breakout trigger of 46.30 taken out on 8/2 at 48.25.

Trigger CF 48.25.  Stop 45.

Peers VALE and BHP pulling their weight too, a good sign. CLF is a materials play higher by 51% YTD and 46% over the last one year period. Earnings have made a nice turnaround with strong back to back gains of 12.7 and 7.4% on 7/20 and 4/20 after losses of 5.5, 5.6 and 5% on 1/25, 10/20 and 7/27/17. The stock is on a 3 week winning streak up by a combined 28%, and is acting well POST breakout from a flat base trigger of 9.18 taken out on 7/20. Enter CLF with a buy stop above a bull flag trigger of 11.10 which carries a measured move to 14.25. One can add to above a cup base trigger of 12.47 in a base that is 1 1/2 years long.

Trigger CLF 11.10.  Stop 10.50.

Recorded very impressive 14 session winning streak in July. IQV is a best in breed healthcare play higher by 26% YTD and 35% over the last one year period. Earnings have been mostly higher with gains of 6.3, 4.6 and 3.9% on 7/24, 2/14 and 10/26/17 and a loss of 1.1% on 5/2. The stock is on a 5 week winning streak, gaining more than a combined 20%. It sits just 2% off most recent all time highs, after a break above a long cup base trigger of 110.77 the week ending 7/20 in a pattern that began the week ending 11/10/17. Enter IQV with a break above a bull flag trigger of 124.75 which carries a measured move to 140.

Trigger IQV 124.75.  Stop 121.

Activist chatter, but has been acting well before that news came forward this week. IBM is a big cap tech play lower by 4% YTD and higher by 2% over the last one year period and sports a nice dividend yield of 4.2%. Earnings have been mixed with gains of 3.3 and 8.9% on 7/19 and 10/18/17 and losses of 7.5 and 4% on 4/18 and 1/19. The stock is higher 4 of the last 5 weeks and this week rose 1.8% after the prior 3 ending between 7/13-27 all CLOSED very taut within just 1.20 of each other. It is still 14% off most recent 52 week highs and filled in a gap from the 7/18 session. IBM completed a bullish morning star pattern Friday and enter on pullback into formation at 146.25.

Trigger IBM 146.25.  Stop 142.

Good news from a housing related name Friday was welcome news for a group in disarray. ESNT is a mortgage finance play higher by 4% YTD and lower by 8% over the last one year period. Earnings have been very positive with FIVE consecutive gains of 4.4, 3.6, 1.2, 1 and 4.3% on 8/3, 5/4, 2/9, 11/9 and 8/4/17. The stock is higher 6 of the last 10 weeks, including advances of 9.3 and 8.9% the weeks ending 6/8 and 7/20. Enter ESNT with a buy stop above its 200 day SMA at 41.30 and monitor the chart as it builds right side of cup base that began with a rejection at the very round 50 number the week ending 1/26/18.

Trigger ESNT 41.30.  Stop 38.

Good luck.

Trigger summaries:

Buy pullback into recent cup base breakout CF 48.25.  Stop 45.

Buy stop above bull flag trigger CLF 11.10.  Stop 10.50.

Buy stop above bull flag trigger IQV 124.75.  Stop 121.

Buy pullback into bullish morning star pattern IBM 146.25.  Stop 142.

Buy stop above 200 day SMA 41.30.  Stop 38.