Markets responded well to Fridays selloff with the Nasdaq and S&P 500 recovering about half of their ugly losses. The Nasdaq rose 1.7% and the S&P 500 added 1.5%. The Russell which lagged Friday losing more than 3% rose less than the major averages tacking on 1.4%. The Nasdaq which has been the leader as of late rallied more than 100 handles off the lows to record a bullish piercing line of 50 day SMA support. The S&P 500 was unable to recapture its 50 day SMA in Mondays trade, but did come close to successfully retesting a double bottom breakout trigger just above 2113 from 7/8 and bounced off its 38.2% fib retracement level. Sectors that shined today came from the defensive staples and utility groups which advanced 1.9 and 1.7%. The XLK was not far behind with a gain of 1.7%. Other groups to keep an eye on is the IBB which is now trading back toward its double bottom breakout trigger of 286.91 taken out on 7/27. The ETF is on a current 5 week losing streak, although it lost just a modest 6.5% in the timeframe. The round numbers are coming into play for the IBB as it made a good looking double bottom with lows at the 240 figure the weeks ending 2/12 and 7/1. If it can break above the very round 300 number which was resistance the weeks ending 8/5 and 8/26 it could find itself undergoing a magnetic pull toward the round 400 number which was resistance the week ending 7/24/15. The transports found a bid at the 140 number and they have been gaining momentum as of late with the airlines seeing some affection last week. Below is the chart of AAL and how it was profiled in Mondays Game Plan. Before markets are ready for a takeoff, pun intended, lets remember the recent volatility we have seen the last couple of sessions is indicative of topping behavior, although the weeks prior we know had one of the tightest ranges in decades. For now score a win for the bulls today as trends overall are more likely to continue than they are to reverse.
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