Markets once again clung near the UNCH mark and perhaps the old adage applies, never to short a dull market. All of the major indexes finished without much fanfare. The S&P 500 CLOSED above the round 2500 number for a second consecutive session and the Nasdaq has gained ground 6 of the last 7 days, but none of the last 6 have moved up or down by more than .5%. The Russell 2000 is now inching in on the 1450 level which can be compared to the 6450 area on the Nasdaq. The Russell on 7/20 registered a doji candle which often signals a weakening of the prevailing trend and on 7/21 recorded a bearish shooting star, and finally on 7/26 put up a bearish dark cloud cover candle. It is not surprising that it is stalling here and it will normally give quick clues as to sentiment of risk appetite of overall market. The Dow continues to act well and is now on an 8 day winning streak and behaving nicely following the cup base breakout above a 22180 trigger.
Looking at individual groups it was the financials that keep impressing as the XLF was the best performer of the major S&P sectors higher by .8%, followed by materials, technology and energy all which gained in the neighborhood of .4-.5%. Lagging were the healthcare, utilities and staples space. The XLU is off 5 of the last 6 days and 2 of those negative sessions lost more than 1%, a rare occurrence for the ETF.
Retail names have been attempting a comeback, but like any group that has been in the doldrums for sometime they should be approached cautiously. As always one wants to bet on names that withstood the onslaught best and purchase best of breed plays. And conversely lagging stocks that get the proverbial “rising tide lifts all boats” should be looked at as shorting opportunities. Below is one such situation, FINL and how it was presented in our Tuesday 9/12 Game Plan. This is a name that filled a gap to the upside and looks to be failing once again. Trends tend to persist more likely than they are to reverse. This also goes for the NKE Jordan sneakers. Tread and trade accordingly, pun intended.