Markets kicked the week off in a jovial mood Monday as all three of the major averages rose near .9% and the Russell 2000 gained 1.2% to CLOSE at session highs. Of the previously mentioned benchmarks only the Nasdaq was able to recapture its 50 day SMA with the other three just beneath the important line. If an index finishes below it is not necessarily a bad thing, but one does not want to see it linger or travel to far away from it so the next few sessions will hold interest. The days rally was robust with all of the major S&P sectors higher and it was the financials which were the best actors with the XLF advancing 1.7%. Many of the names in this group were flashing bearish head and shoulders formations and one day does not resuscitate a group and the fund has bee frail since a bearish engulfing candle on 3/2. Keep in mind that many will question the validity of todays move as the banks have been a laggard, just as the energy sector which led a couple of days last week powerfully. Monday the energy names were the losers as the XLE was the worst performer, “up” factionally. The action in the VIX today could have been telling as it recorded a bearish engulfing candle, losing more than 8%, after last Thursdays spinning top candle which may have been foreshadowing as they normally warn of an impending trend change. One group that has been steadfast in acting well recently has been the homebuilders. The XHB is just 2% from its recent 52 week highs and the chart is sporting a bull flag pattern. Getting back to the finnies, which impact the builders, if they can get there act together and one wishes to look OUTSIDE the US, one may look at BSMX, a Mexican best of breed play. Below is how it appeared in our Friday 4/7 Game Plan.
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