Markets displayed some very easy to spot bifurcation on the holiday shortened Monday. The S&P 500 rose by .3% and the Russell 2000 was a clear out performer on the session rising .8% and keep in mind this benchmark will shine as long as the financials continue to receive the healthy rotation it has being the indexes largest weighting. Very concerning was the Nasdaq which turned a decent early on move of .5%, and ended up CLOSING upon its lows and flipping to a .5% loss. The tech wreck continues and the Nasdaq finished underneath its 50 day SMA and is now lower 5 of the last 6 days and is 4% off recent 52 week highs as the S&P 500 lies just 1% from its own recent all time highs. The Russell 2000 is looking to break above a bull flag trigger of 1430 which would have a measured move of 70 handles to the round 1500 number (with all its volatility in the last 6 months the RSI has not touched either the oversold 30 number or overbought 70 figure). Monday certainly had a risk on feel with energy, financials, materials and industrials acting the best and the utilities and technology lagging. Energy CLOSED Monday right at resistance at a declining 50 day SMA, which has repelled its progress four times now since falling below the line on 1/27. The ETF is currently 16% below its most recent 52 week high and the question is whether this is a dead cat bounce or the start of something fresh. I feel it is the former, but I would rather play individual names in the space and an unconventional one would be an energy proxy play or the Canadian banks. Below is the chart of TD and how it appeared in our Thursday 6/29 Game Plan. If the measured move of the head and shoulders breakout proves correct, the stock still has a move of close to 4-5 handles in it and playing this name gives you the wind behind your back of the financial sector.
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