Markets put in a solid start to the week and bulls were happy to see the Nasdaq lead the way. The tech rich benchmark scored its seventh straight Monday gain higher by .8%. The S&P 500 added .5% as it looks ready to test the round 2400 number once again this year. The Russell put in a strong day as well gaining .7% but still remains below its 50 day SMA, but it badly lags the prior two aforementioned indexes and a good reason for that may be the emerging outperformance of Europe. Keep in mind the Russell is made up primarily of names that generate their overwhelming revenue in the United States. Looking at individual groups it was technology that led with the XLK advancing .85% but the utilities did even one better gaining almost 1%. The staples were not far behind with the XLP gaining close to .6%. The XLP is narrowing in on a 56.12 cup base trigger in a pattern 10 months long and for the last 14 weeks has traded remarkably tight with each week finishing with a 54-55 handle. Of course this is considered a defensive group and may be communicating investors current desire for yield, but capital appreciation is sprouting in a lot of these names. Take KO, the ETFs third largest component, which is very smartly building the right side of a long 13 month weekly cup base with a potential trigger of 47.23. The stock is up 8 of the last 9 weeks and the lone down week lost just 10 cents the week ending 5/12. Some other “defensive” names to keep an eye on are the healthcare stocks. Below is the chart of JNJ and precisely how it was profiled in our Thursday 5/18 Game Plan. It is acting well POST breakout from a double bottom trigger of and is now offering an add on buy point above a 128 trigger in a current flag formation.
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