Markets finished the week Friday with both the Nasdaq and the S&P 500 falling a modest .3%, cutting intraday losses of .75 more than in half. For the week both benchmarks ended prior 3 week winning streaks and the Nasdaq fell .4% and the S&P 500 dropped .7%. The Nasdaq is now higher 12 of the last 15 weeks and the last 3 have all CLOSED very tautly, less than 20 handles from each other. That type of coiling action can lead to outsized gains, and the breakout tend to go in the direction of the prior trend. Add to that the fact that the index is doing this near all time highs, and bulls are feeling good about themselves. Of course veteran traders are always concerned about what they can lose (much more so than what they perceive to gain) and rarely get overconfident as they know markets can be very humbling. The Nasdaq chart is taking on the look of a bull flag pattern beginning with the bullish piercing line candle on 9/12 off the round 5100 figure and a breakout would occur above the 5340 handle which on paper gives you a measured move 240 handles higher than above the pivot. The S&P 500 chart recorded a bearish engulfing candle at downward sloping 50 day SMA resistance and that benchmark has a lot more to prove. With the first week of October now in the rear view mirror the Nasdaq now has a slight lead on a YTD basis advancing 5.7% compared with the S&P 500’s 5.4% gain. Looking at individual sectors on a weekly time frame only one group gained and that was the financials with the XLF rising 1.7% (energy finished the week UNCH). Utilities, via the XLU, are on an 11 session losing streak and the ETF has not put up back to back 3.8% weekly losses. In last Mondays Game Plan we discussed how we thought crude would trade to the round 50 number and then would be time to reassess. Thursday was the only session to CLOSE above 50 as Friday registered a bearish dark cloud cover candle. The candlesticks have been accurate in forecasting tops in WTI with a bearish evening star pattern completed on 8/22, which knocked it down a quick 10%. Keep an eye on best of breed names and some in the services sector are worth it. Below is the chart of FET and how it was profiled in our Friday 9/30 Game Plan. The trigger was not hit but any pullback toward the round 20 number should be bought as it is on an impressive 3 week winning streak up more than a combined 22%. Peer FTI is enjoying an 8 session winning streak and is now at highs not seen since last December.
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