Markets ended the week Friday on a strong note with the Nasdaq and S&P 500 adding .8% and the Russell 2000 shined higher by 1.1%. After 9 straight weeks of the Nasdaq outperforming the S&P 500 between the weeks ending 7/22-9/16, the S&P 500 has now made it back to back weeks of outdoing it higher by .2% compared to the Nasdaq’s slim .1% advance. Energy was once again the best performing sector Friday with the XLE rising 1.4% and recording only its second weekly CLOSE above the round 70 number and perhaps for once OPEC can be relied upon. Concerning the markets correlation to oil, which is not always intact anymore, the chart of WTI looks like it is being magnetically pulled toward the very round 50 number, which can keep the major averages in bull mode. The chart of the UUP can help that cause as it is now sporting a bearish head and shoulders pattern with a slanted neckline in a formation that began on 5/3 with the ETF registering a bullish engulfing candle. Some trepidation for the bulls may show itself on the monthly chart of the S&P 500 as it has now CLOSED the last 2 months with an indecisive doji candle. These type of candles are not common at all, and not we have consecutive ones. Looking back to the one prior to the last 2 occurred last November and led to a 3 month losing streak with some very volatile swings as the range was 300 handles. For the week it was all energy atop the leaderboard with the XLE jumping 4.4% and almost in an inverse fashion lagging were the utilities with the XLU retreating 3.8%. We can now fast forward into October which is not as scary as many make it out to be, and the fourth quarter is historically a strong one. Surprising were some of the names that did not participate in Fridays euphoria. One that comes to mind is the recent IPO TWLO. The stock recorded a bearish shooting star candle at the round 70 number, which it was unable to record any CLOSES above. It is now below a 66.50 cup base trigger it took out on 9/27 and this stock looks like one that is a bit extended, but one wants to keep on a watchlist for an entry in the near term.
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