Markets rose for a third consecutive session Friday with the Nasdaq and S&P 500 up .4%. The Nasdaq rose 4 of 5 sessions this week but everyone CLOSED right near the top of its daily range. Both benchmarks recorded their 5th consecutive weekly gains with the S&P higher by 1.3% and the Nasdaq adding 1%. On a YTD basis the S&P 500 still maintains a significant advantage with a .2% GAIN while the Nasdaq is lagging lower by 4.2% in 2016. Contributing to that Nasdaq deficiency most likely has to do with the FANG underperforming and perhaps that is because none of the 4 pays a dividend, and investors are hungry for yield. Indexes continue to be very challenging as many investors most likely were caught on the wrong side in the brutal January month, and it seems many were positioned on the short side for the last 5 weeks. Is the market one of the most perplexing in recent memory or could it be as simple as following the trend as short as it may be? Bulls could be encouraged by the oil correlation beginning to thaw a bit as on Friday with oil reversing to close lower by 2%, the major averages were mostly undeterred and the fact that next week is a holiday shortened week which tend to behave well. Bears may point to the Dow, now having advanced 1% this year as of Friday’s finish, being a negative as investors are latching onto mature, defensive equities. Healthcare and financials led the way Friday but the real story continues to be weakness in the greenback which gives the risk on trade a nice tailwind. The UUP has made a series of lower highs and lower lows since last December (fell for a 3rd consecutive week) and that has given the cue for commodity producing nations to move higher. Below we look at EWC which has closely tracked the move in crude which did reverse today to CLOSE back below the round 40 number. Today the ETF recorded a bearish engulfing candle after finishing above its 200 day SMA this week for the first time since late ’14. The fund is still 20% below 52 week highs suggesting that this up move still potentially has plenty of room to run.
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