Markets opened the week almost exactly where they left off on Friday. They never came close to being near the UNCH line on the day underwater by 1% from the start, but a late session rally halved losses. The Nasdaq at the expense of sounding like a broken record underperformed once again dropping 1.8%. A look on its daily chart shows a bear flag pattern which began at the 5100 figure and slipped underneath it Friday as it sliced the 4500 trigger. A measured move could take the benchmark to the 3900 level. Perhaps a retest of the breakdown trigger first will be in order. Financials continued to get pummeled and they were the worst performing group Monday off 2.6%. Of course their are many subsectors within it, but some of the creme of the crop finally were chopped down to size, specifically the exchange plays. Last week saw a bit of bifurcation with some names acting well and others which did not. ICE and CBOE fell 10.5 and 9.5% respectively after reporting earnings (exchange plays behaved well Monday). The better actors like CME and NDAQ fell 1.5 and 4.2% (we are long NDAQ). Destruction in other parts of the industry is astounding. Take a former best of breed name IBKR which advanced just 4 sessions in all of January and is now lower 35% from recent 52 week highs after taking out a cup with handle trigger of 44.32 on 12/4. It never CLOSED higher than it did that particular day, a red flag as the best breakouts will often work right away. One thing I did notice that was trending today, not just on financial TWTR traders was that #gold was trending. Perhaps a strong dead cat bounce rally is around the corner? Utilities the top performing group by far thus far in ’16 continue to impress. Below is the chart which appeared in our Thursday 2/4 Game Plan. It is testing its breakout trigger of 85.46 at the moment.
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