Markets closed near session highs Friday with the S&P 500 higher by .4% and the Nasdaq .3%. Wednesday would have to be considered the most valuable session of the week as both indexes put in solid reversals, with the Nasdaq CLOSING 100 handles of its intraday low and the S&P 500 slicing its 200 day SMA only to go out strongly and finish above. Both benchmarks are also beneath their 50 day SMAs and the Nasdaq now has the set up to us as a purchase with a buy stop above its 50 day SMA then again 100 handles through a double bottom trigger of 5177. Once again concerning to us is the outperformance of the S&P 500 which now is at 4 consecutive weeks. Appetite for risk and a healthy market is when participants favor technology. For the week the S&P 500 closed higher by .7% and the Nasdaq by .1%. YTD the Nasdaq still maintains its comfortable margin over the S&P 500 by 6.6 to 1.6%. The outperformance can be seen by the S&P when one sees how far each index is off all time highs now with the Nasdaq 3.5% off its and the S&P 500 by just 2%. The utilities were the best performing group Friday and second best for the week up 2.7%. Below is the chart of the utilities play SCG which we examined in our 7/17 Game Plan. It is now well above the 200 day SMA and the round 50 number it recently touched. Energy was the top performing group, up 3.5% for the week, despite WTI slipping for a 9th consecutive week. Lets be careful here though as the XLE is now sporting a bear flag pattern. One sliver of hope for the bulls is the abundance of pessimism as consensus overwhelmingly predicts much lower prices. As always let the price action guide you.
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