Markets rebounded somewhat from the late afternoon Fed speech and it was the Nasdaq that was the loser with the tech heavy benchmark weighed down by the action in the semiconductors, declining fractionally by .1%. The SOX lost 1.4% and may have recorded a bearish evening star pattern at a double top at the 1150 number. Leaders in the space including AVGO and LRCX lost more than 2% Wednesday. The S&P 500 rose .1% and it recorded its third straight finish above the round 2500 figure, registering a bullish hammer, although the bear would declare it a hanging man. The Russell 2000 continues to flex its muscles higher 17 of the last 22 days, as the banks have the largest weighting, and now slightly below the 1450 V shaped cup base. There are some slight bearish developments taking place with the major indexes, but as my friend @JKrinskyMKM wrote in a recent piece a meaningful correction is unlikely as, “the two biggest sectors, Technology and Healthcare, still have 82% and 77% of stocks above their 200 DMA, respectively”.
Looking at individual groups the financials are really showing nice signs of strength as the XLF rose .6%, and energy was higher with the XLE up .7%, and the industrials theme is growing stronger by the day (WTI has now CLOSED above the round 50 number for a fifth consecutive day). The clear laggards were technology with the XLK down .4% on the backs of the AAPL and MSFT, representing 25% of the ETF, off by 1.7 and .7% respectively. A bit more perplexing is the action of the more traditional defensive groups as the staples and utilities seem to be forecasting some rate hikes later on in the year. The XLP and XLU slipped 1 and .8%.
The transports, with the IYT building upon its breakout above a double bottom trigger of 170.24 on 9/11, continue to be a tricky group with the airlines grounded, pun intended, but trying to rebound. The rails are acting well on all cylinders after FDX gave a bullish thesis on not only them but the truckers and the logistic plays. Below is how we looked at TRN in this Mondays Game Plan and this name could be a nice beneficiary as it produces railcars and the industrial play, and also has ties to the resurgent energy arena. The round number theory is hard at work here as that figure proved thorny resistance looking back to the week ending 7/31/15 and 10/23/15 and again this February. Lets see if this push above 30 has room to run.