Markets never short dull market is the old adage. Well that sage advice looked anything but Friday as the major averages crumbled underneath their 50 day SMAs in energetic trade. The recently named acronym TINA showed what can transpire when to many participants are on one side of the boat. The question now is whether the V shaped recoveries we have all come to expect will continue. We should expect some follow through to the downside Monday, as the last 2 times the S&P 500 was off at least 2% on a Friday the following Monday’s were lower by 3.9 and 1.8%, on 8/24/15 and 6/27/15. Both those sessions were the short term lows as markets perked up rapidly. The S&P 500 and Nasdaq both dropped 2.4% for the week and recorded a bearish engulfing candles, and we spoke recently of how the daily charts were sporting some potential weakness ahead with dojis and hanging mans. The “best” performing group Friday were the financials with the XLF losing 1.9% on the chatter of likely interest rates rising going forward. The utilities were slaughtered today with the XLU losing 3.7% which I find curious as many names in the sector have dividend yields triple that of treasuries, and investors have become burned too many times in recent years with the banks, but they have become so heavily regulated it would be hard to see them make big sustained moves northward. For the week the staples surrendered nearly 4%, and the XLE was the lone major S&P sector to advance rising .9%. Below is a name we were fond of in the group, PSX, and why we insist on CLOSING prices with all of our triggers. Here is the chart and how it appeared in this Wednesday’s Game Plan and notice how it failed to finish above the recommended trigger of 80.25.
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