Markets ended the week on a positive note with the S&P 500 up .5% and the Nasdaq up .3%. For the week however the Nasdaq gained the upper hand with a 1.2% gain compared to the S&P 500’s .9% advance. It was the first time the Nasdaq outperformed the S&P 500 in the last 4 weeks helped by investors flocking into the beaten down biotech and semiconductor groups. YTD the Nasdaq still maintains a comfortable margin higher by 3.2% while the S&P 500 is still in the red by 1.3%. Both benchmarks are on 3 week winning streaks but volume has decelerated with each successive week. Looking at each indexes 200 day SMA one can see the Nasdaq still flatlining, while the S&P 500 is sloping downwards. The biggest takeaway from the past week was the earnings shortfall in some key transport stocks, a group we thought were on the mend. CSX lost 5.7% this week after falling 1.9% on Wednesday. KSU which many consider a bellwether in the group fell 10.8% this week and the stock has had difficulty clearing the round par number with no weekly CLOSES above despite trading above intraweek the weeks ending 7/17/ 7/31, 8/14 and 10/9. CP and UNP report this coming week and perhaps one can say the market absorbed those CSX and KSU disappointments and held up well.The semis look encouraging with 3 consecutive weeks higher and CLOSING at the top of their weekly ranges, but unlike the Nasdaq volume ACCELERATED each successive week. Glancing at the IBB, it is hard to say where it is headed but the last 3 weeks traded well below the round 300 figure, with the week ending 10/2 finishing 30 handles off intraweek lows, 10/9 by 16 and this week by 17 handles. All 3 weeks CLOSED above 300 after resistance at the 400 figure the week ending 7/24. Below is the chart of ADXS, and how it appeared in our Tuesday Game Plan, and explains why we adhere to the round number theory.
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