Markets began the week right where it left off Friday with gains not as robust but the rally still intact. It was the Nasdaq leading the way which has become a common occurrence lately, up .6%. The S&P 500 gained .3% and again the small caps put up an impressive showing powering ahead by 1.1%. The Nasdaq was stopped at the very round 5000 figure and a break decisive break above that number could be interpreted as a breakout above a bullish inverse head and shoulders pattern best viewed on the weekly chart which began last July. For a second consecutive session it was the utilities, healthcare and staples that lagged and financials and technology that led. The XLK is flirting with the mid 44 level which it touched last November and December and this April. I break above that area would be through a bullish ascending triangle pattern. Tech plays that are acting well is cloud best in breed play CRM. Below is the chart and how we profiled the name in our Thursday 7/7 Game Plan and it is now comfortably above its 50 day SMA at 79.50 and is currently stalking the add on buy point above an 82.42 double bottom trigger. The transports are a group that should be monitored as crude continues to trade lower after recent bullish forecasts of 70 and 80 (even the analysts love the round numbers). Airlines have benefitted from the slump although they have been the laggards in the overall sector. Today the rose the most however. Stock with the rails and truckers as we know it is difficult to pinpoint the end of a trend and we know trends are much more likely to persist than to reverse. Financials are also beginning to perk up and the XLF CLOSED above its 50 day SMA and now sniffing out its own double bottom trigger of 23.43. Notice the last time however the ETF finished above its 50 day SMA on 6/23 (which also created the pivot) the very next session slumped more than 5% on 6/24 following the Brexit news. Highly doubtful anything will come out tonight that will have that same kind of impact. Bank on it.
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