Markets scored decent reversals Wednesday with all the major indexes finishing higher, albeit moderately. It was the Nasdaq which fell the most intraday lower by almost .6% at lunchtime and the tech rich index bounced almost precisely off the round 5200 number to record a doji candle which is often associated with a prior move running out of steam. Scouring hundreds of charts recently I have found this market will just bulldoze over bearish candlesticks and the candles have been much better forecasting bottoming patterns. It also extended its long streak of not recording back to back losing sessions by the slimmest of margins rising .03%. The S&P 500 registered a bullish hammer candle to CLOSE near highs for the session up .2% and it appears for the time being the big bears out there will have a little more trouble sleeping at night. Perhaps the bears could hang their hat on the outperformance of the utilities which were clear leaders today with the XLU recorded a big bullish engulfing candle to CLOSE above the very round 50 figure which has been important. That round number was resistance dating back to the week ending 1/30/15 and again the week ending 4/1. It finally climbed above 50 the week ending 6/3 and the next 3 weeks all CLOSED extremely taut with all finishing within just 6 pennies of each other and leading to a huge week for the defensive ETF ending 7/1 which jumped almost 4%. Was Tuesdays action a bear trap? A weekly CLOSE above 50 would suggest so, as the yields of these names still must be adored by pensions fund managers. Staples were the second best actor today with the XLP higher by .4%. Below is the chart of CREE which was profiled on our Tuesday 7/26 Game Plan. It slumped almost 15% Thursday after reporting numbers demonstrating that laggards will generally lag, even within a strong group giving investors the chance to pair these names up with leaders within.
This article requires a Chartsmarter membership. Please click here to join.