Markets scored moderate gains on Wednesday and it seemed to find its footing with crude bouncing after an OPEC understanding. At least that is what was reported to move the averages north today and if you believe that was the reason, one should be leery of todays rally, as OPEC can not be trusted whatsoever. I personally feel we are just grinding higher against the proverbial wall of worry and keep in mind what is comfortable while investing is rarely profitable so embrace the upset stomach feeling. Absent somewhat from the party was the Nasdaq as it lagged finishing higher by .2%. It is due for a pause as last week remember did put an end to its outperforming the S&P 500 for 9 consecutive weeks. The S&P 500 marginally recouped its 50 day SMA which is beginning to flatline and it is running into the round 2200 figure that has been a thorn in its side (the benchmark is still making higher lows and the bullish piercing line candle on 9/12 was the latest higher low and could be readying for a thrust above 2200. Energy recorded a gigantic session with the XLE higher by 4.3% and stopping just short of the round 70 number. The ETF did complete a bullish morning star pattern, however those formations tend to work better at bottoms and the type of behavior the fund is exhibiting could be viewed as toppy. Bottoms are woven with tight rounding fashion and tops are more volatile in nature. Below is the chart of APA and how it was profiled in our Tuesday 9/13 Game Plan. The stock never CLOSED below the 56.55 stop and today gushed higher by 7%, pun intended. APA has to be added to best of breed names in the group like a PXD or EOG. Materials and industrials rounded out the top 3 groups which gave a risk on flavor Wednesday. Utilities were todays laggard and the only sector to lose ground 2 consecutive days, although it did record a bullish hammer candle to CLOSE above the very round and meaningful 50 figure. We are beginning to see more breakouts on a daily basis which is a good sign for the bulls and there have been some well received earnings gaps from important and diverse groups recently such as ADBE and FDX. Both of those names however lost ground Wednesday recording bearish haramis and ADBE registered a harami cross whose pattern tends to be a bit more reliable. As much as I like the candlesticks, always remember they are secondary to PRICE action.
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