Markets produced very nice follow through after Tuesday’s big gain, and once again it was the Nasdaq that assumed a leadership role. The Nasdaq advanced 1.9% compared to the S&P 500’s 1.7% and it was a positive to see the Russell 2000 enjoy an advance of 2.2%. Good to see was the participation among the financials which were the strongest major S&P sector as the XLK jumped 2.3%. In fact 8 of the 9 major S&P sectors rose by more than 1.1% and the only exception today was the utilities which gained .3%. The XLU is higher thus far by 1.5% and is enjoying a 5 session winning streak and has moved above the 51 level, which was highlighted earlier in the week. Is this very common V shaped recovery now a function of TINA? Was Brexit just so hyped up to the possibility of a big move to the downside after a very hyped up media campaign to remain? Who cares, all that matters is the price action and we are beginning to see some presence of new groups joining the fray? Healthcare has been assuming its role to the rotation as it is higher by 6% the last 2 session recovering all of the 6/24-27 losses almost precisely. Over the last 6 months the best performers have been the utilities and energy rising 19.1 and 12.7% respectively. So it was good to see the energy group act very well with the XLE gaining 2% today and the dividend yield is juicy at 3.6%. Perhaps going into quarter end there was some window dressing taking place in that space. What I like to look for is names that hold up reasonably well in times of market distress. Below is the chart of MBLY that we highlighted in this Mondays Game Plan and what caught my eye with the stock was the action last Friday when the Nasdaq sank 4.1%, MBLY CLOSED well into the upper half of its daily range and bounced precisely off the round 40 number. On Monday it found support exactly at its 200 day SMA and is now higher by more than 2% from the recommended entry.
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