Markets:
For a third consecutive session the Nasdaq lagged, as the tech heavy benchmark rose just .1%. It did CLOSE off intraday lows, and bounced off 50 day SMA support for the second time in the last 3 days. We touched on FB yesterday and its weekly chart looks ugly with double digit losses of 13.9 and 16.7% the weeks ending 3/23 and 7/27, both in the largest weekly volume in over 4 years. NFLX, lower everyday this week, is now lower by 25% off most recent 52 week highs. AAPL on the other hand is at all time highs, and GOOGL today filled in a gap from the 7/23 session, and in the process retested an 8 month cup base breakout trigger that aligned with the round 1200 figure. And some still say stock picking is dead.
On a weekly basis it was the Dow showing muscle adding 1.4%, the S&P 500 and Russell 2000 rose .6 and .4%, and the Nasdaq FELL .3%. The semiconductors have been a big reason with the SMH in correction mode down 10%, compare that to software lower by 4% from most recent 52 week highs. Growth has been leading value for 10 years now, and is a big trend change upon us? I still think there is too much chatter about it, but the move is nascent so the legs are fresh and could have more room to run. The VIX gave a brief thrill after this week, but CLOSED below both its 50 and 200 day SMAs Friday. Remember it registered a bullish weekly hammer candle off the very round 10 number the week ending 8/10.
Sectors:
The staples were firm Friday rising .8%, and it was the second straight day it was the best major S&P sector performer (on Wednesday it was the second best actor). The materials, industrials and utilities rounded out the top four best groups. Lagging, but still finishing in the green, were technology and the cyclicals which both advanced in the .1% neighborhood. Looking at the XLK chart, volume trends have been suspect, with just 6 accumulation days since early February. Give the ETF credit for trading just 1% off most recent 52 week highs and enjoying the comforts on rising 50 day SMA support.
On a weekly basis it was easy to spot the winners as again the staples were the best performers as the XLP jumped 3.3%, its third best weekly gain of the year behind 3.5% advances the weeks ending 2/16 and 3/30. The utilities were the second best weekly gainer as the XLU rose by 2.8%. The move into defensive natured spaces is nothing new, although, the talk about them is incessant. The utilities on a 3 and 6 month basis has been the strongest major S&P sector, and on a one month look it has been led by the healthcare arena with the XLV up 4.3%, followed up by the utilities and staples. I may be wrong here, but I believe that the Barron’s Roundtable at the beginning of the year talking to the investment “gurus”, showed almost everyone mentioned to avoid these areas.
Special Situations:
The chemicals group has not been one discussed much, and that could lead to some undiscovered possible gems. To be clear I like to buy strength, but there will be some set ups that prove to be potentially very worthwhile. One scenario could be the chart of ALB below and here is how it was profiled in our Tuesday 8/14 Game Plan. This was a former best of breed play that now rests 34% off most recent 52 week highs. It could be building the right side of a long cup base that began last November near the round 140 number. Since the first week of March it has encountered problems CLOSING above the very round par number, doing so just three times. Looking on a shorter time frame it has held the important round 90 number well and filled in a gap on 8/15 from the 8/7 session.