Markets demonstrated some potentially disturbing bifurcation Friday to end the week as technology was hit. The Nasdaq fell 1.8%, but at its session worst was off more than 2.8%. For the week it recorded an ugly bearish engulfing candle dropping 1.5% at all time highs and it was accompanied by the second largest weekly volume of 2017 thus far. On a YTD basis it is still ahead very comfortably by 15.3% and it will be interesting to see how Monday reacts as the tech rich benchmark has shrugged off big one day slumps this year very well. The sessions of 3/21 and 5/17 dropped 1.8 and 2.6% respectively, but neither of them gave investors the weekend to think about it. For the week the XLK was the worst S&P major sector performer giving up 2%, but on a 6 month basis it is still the clear winner up 16.1%. If this weakness persists it will be troubling as technology carried this rally on its back, but more concerning was the action in some of the leading names. NVDA registered a bearish engulfing candle falling more than 6%. EA followed through from Thursday bearish engulfing candle too falling 3.3% Friday. CAVM has slumped 6.2, 7.1 and 4.5% on 4/28, 5/17 and 6/9. Notice how the semiconductors which have been the biggest contributors within tech, today were the hardest hit. The prior two we mentioned here have been leaders, but below is a lagging play in the group IPHI and how it was profiled in our Tuesday 6/6 Game Plan. Soft stocks within a strong group are prime shorting candidates and IPHI is down 9 of the last 15 weeks and 27% off recent 52 week highs. SPLK which had been looking solid recently is now off a quick 16% from recent 52 week highs and is now back below a cup base breakout trigger of 66.56 taken out on 5/5, slicing its 200 day SMA in the process. On the flip side it was very recent that many were claiming that the markets would not be able to remain robust without financial participation. Well this week they came back to life in a big way with the XLF screaming higher by 3.6% for its best weekly return since early December. I wonder if investors will be wishing that technology was the group leading the way. Time will tell.
This article requires a Chartsmarter membership. Please click here to join.