Markets:
The Nasdaq made it eight straight advances Thursday, albeit barely. It rose less than 4 handles today and just missed CLOSING above the 7900 number. The S&P 500 continues to trade in such a tight fashion, its chart looks like a stock that has been bought out. Remarkably for the third consecutive day its daily range was within 10 handles. And not to be left out of the bullish discussion, the Dow even though it is 4% off most recent all time highs, is acting well this week. Heading into Friday it is up .2% for the week, looking for a SIXTH straight weekly gain. If that happens would be the first since an 8 week streak between last September-November.
The VIX seems to have found a floor here near the very round 10 number, today coming with .17 of touching the actual number precisely. For the third straight session it CLOSED well off its lows with yet another bottoming candle Thursday, a powerful bullish hammer. This instrument is certainly in a downtrend, but like a wounded animal one has to be careful of its bite. It can be volatile as it approached to very round 20 number this April-June before quickly reversing. It should remain constrained near these levels for sometime, but I am getting the feeling that something is brewing.
Sectors:
Materials and cyclicals led the way on Thursday with the XLB posting a .5% advance. The ETF sits 7% of most recent 52 week highs and has been having issues CLOSING above the round 60 number. On a weekly basis it has achieved just one finish above 60 since the week ending 3/9. One of the better looking weekly chart ETFs is the XLY. Heading into Friday it has added 1.6% and is looking at a potential 3 week tight pattern breakout as the last 3 weeks all CLOSED within just .51 of each other. AMZN, that we spoke about yesterday, has a huge say in the XLY being its largest component at 25%.
Lagging today were the financial and energy groups. The XLF and XLE lost .6 and .9% respectively. The XLE is lower by .5% this week, showing some follow through after last weeks bearish dark cloud cover candle that slipped 1.8%. Earnings from names in the space continue to flow in, pun intended, and they disappointed including OXY, MUR and FANG. Although both of the aforementioned ETFs are 6 and 7% off most recent 52 week highs, the XLF looks more attractive to me as it trades tight following the 7/20 and 7/27 weeks which both rose 2.1%.
Special Situations:
China has been in the news plenty as of late, and many of there names have suffered somewhat from the tariff discussion. As always technicians prefer to rely solely on PRICE action, but one can look for names that are holding up somewhat well during the struggle. Below is the chart of MOMO, and how it appeared in our Thursday 8/2 Game Plan. It has not demonstrated particular relative strength as it sits 23% off most recent 52 week highs, somewhat in line with the FXI’s 20% drop. But one has to respect the technical aspects of the chart. It successfully filled in a gap from 5/25 and has held the round 40 number too. On its weekly chart it has advanced nearly 4% so far and has the look of a bullish engulfing candle.