Markets closed out a negatively Friday for the first time losing ground in 5 weeks. Both the Nasdaq and S&P 500 closed down a bit more than 1%, with the S&P maintaining one percentage point gain on a YTD basis. Curiously looking at YTD figures, the Dow which I do not follow all that much, is leading with a 16.8 YTD advance, compared to the S&P 500’s 15.7, and the Nasdaq’s 14.6. There is still an appetite apparently for the old, pesky defensive names like AXP BA CSCO DIS HD JNJ. Talking about defensive sectors utilities had another big volume down week, in its last 3. This time however its 50 day SMA wilted. There are some groups that are starting to benefit from the potential ongoing rotation. Energy is creeping its way up with retail not to far behind. I will maintain by bearish stance, but I know as a trader that circumstance can change very quickly. What you want to pay close attention too are stock that ignore the markets fragility in weak moments. Some this week that I would put in that category were an ODFL, up 4% in double weekly volume. WAG was up everyday this week including Wednesday, a formidable stance. BLMN recorded a bullish outside week in huge trade. The problem for the bears in my opinion, speaking on Thursday and Friday’s bullish stubbornness, was the fact that benchmarks were rather weak to start the day. We need the futures up handsomely maybe Tuesday or Wednesday, with a heavy volume sell off into the close. Classic characteristics of bear market activity. That could provide some fuel to the downside. I could envision a scenario of the S&P 500 shaving another 3%, which would correspond wit its 50 day SMA near 1600. Problem if that plays out is we know the more time a moving average is tested the greater the probability is could break. And the S&P 500 has retested that line 3 times since the start of 2013.
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