Markets were mixed on Wednesday with the Nasdaq asserting itself once again and although it is only two back to back sessions of outperformance it is an encouraging start. The Nasdaq rose .4% while the S&P 500 gave back .2%, and the XLK was one of the best actors today advancing .9%. There is still work to be done for the ETF as its 50 day SMA is sloping lower and it currently trades beneath. A failure near the 47.50 number would give the chart the look of a potential bearish head and shoulders pattern. The softest sector Wednesday were the financial and utilities with the XLF off by 1.4% and the XLU by .7%. What a dichotomy between the two industries with the XLF now just 2% off its most recent 52 week highs while the XLU is 14% off its own. Obviously both are responsive to the perceived direction of interest rates, and the consensus is they are going higher. The bifurcation last week was stunning with the XLF jumping more than 11%, and achieving its first weekly CLOSE above the round 20 number since the week ending 12/4/15. The XLU on the other hand fell 4% last week, its largest weekly loss in all of ’16 so far and it came on the largest weekly volume in the last 5 years. Consumer discretionary continues to behave itself and was one of the few sectors to finish in the green Wednesday with the XLY higher by .5%. Today it CLOSED just above an 80.31 double bottom trigger and is on a current 8 session winning streak. Its action has to be interpreted as bullish, with 3 of its top 4 components in correction mode with AMZN 12% off recent highs, HD 10% and DIS 18% although its chart is beginning to look much better as of late. Below is the chart of peer Adidas, and how it appeared in Wednesday’s Game Plan, which is a leader that has pulled back 17% from recent 52 week highs and one that I feel offers good risk/reward here.
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