Markets shrugged off decent early losses to show lukewarm gains only to give it back by the close. Losses were minimal with the Nasdaq and S&P 500 finishing just under the UNCH mark. The S&P 500 bounced off the round 2100 number for the third time in the last 6 sessions, which doubles as rising 50 day SMA support. The bottom diagonal line in its failed breakout from the ascending triangle at 2120 is still holding up, for the time being. The leading Nasdaq is carving out its own ascending triangle and a punch above the 5120 mark would signal a breakout and perhaps put to rest whether it is just pausing here in a huge, unorthodox cup base dating back to March 2000 or we are churning at a major double top. Materials and energy led the way suggesting some risk on may be coming to the fore. Select energy names are starting to look good to us and piquing or interest in the sector. PXD which recently garnered a lot of attention as an Einhorn short, and rightly so as it fell from the round 180 to 150 handle, may be overdone. The stock did decline 14 of 17 sessions between 4/17 -5/11. Is it a dead cat bounce or will it find its footing for a move higher. A drop in rig counts as reported last week by BHI has put a bid under crude and could act as the wind behind some of theses names. Some retail names acted well today with the likes of PVH and DG outperforming but overall the group looks sloppy. Here is a chart from our Wednesday 5/6 Game Plan, Lands End. Laggards generally will continue to falter. Buy strength and sell weakness.
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