Markets displayed bifurcating action Monday with the Dow eking out a small gain and the S&P 500 and Nasdaq falling by .1 and .6% respectively. One could make the case that the Nasdaq now shows a bearish evening star pattern after last Fridays spinning top candle at all time highs. And the Dow which has been a strong leader actually recorded a spinning top candle of its own, less than 1% from the extremely round and well talked about 20000 figure. Early on its was energy which exploded out of the gate, but the XLE gave back most of the morning gains by the close finishing higher by .5% on the session. Markets upswing seems to be broadening with defensive sectors taking a liking, with the best performing groups coming from the real estate, healthcare and utilities and staples groups Monday. Singling out the aforementioned “safe” sectors the ones that look to have some potential are the staples and healthcare with the XLP completing a nice morning star pattern on 12/2 (notice the 12/1 session recorded a bullish hammer candle off the very round 50 number). The XLV has acted lukewarm since its bullish harami candle on 11/4 and although many point to the bearish death cross in mid November, that pattern has more bark than bite. It has acted well since the bullish engulfing candle last Thursday with its real body encircling the hammer candle from the day before. Without question it is trickier calling bottoms than it is to buy continuation patterns in uptrends, but one can look for names in the industry as long as the lows off 66 hold up from 11/3. Financials and consumer discretionary were the hardest hit Monday with both lower in the neighborhood of 1%. These sectors have to be given the benefit of the doubt, until it no longer warrants it. Below is the name of IVZ and how it was highlighted in our Monday Game Plan this week. It is currently retesting both a bull flag and inverse head and shoulders breakout.
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