Markets ramped higher Wednesday and went out strong CLOSING near session highs and this is starting to feel like a melt up into year end could be underway. The action the benchmarks are displaying is classic bull market behavior, not selling off and letting investors back in. As we approach the beginning of October underperforming managers are going to have start thinking about FOMO as the end of the year push commences shortly. The historical strong Q4 allure may be to tempting for some to ignore. The Nasdaq shined today up 1.15%, and recorded a strong rebound off its 50 day SMA and is now flirting with the rough 6450 area that has held it back 3 times since 7/27. Therefore follow through it next next few sessions is vital. The S&P 500 is acting well POST breakout from the 2490 cup base breakout level taken out on 9/12, and successfully retested on 9/25. The real MVP today has to be handed out to the Russell advancing a tidy 1.9%.
Looking at individual groups the financials and technology were the clear winners with the XLF gaining 1.4 and XLK .9% Tuesday. The XLF recorded a bull flag breakout today and the measured move is to 28, and it is now higher by 1.1% this week so far after back to back powerful weekly gains of 2.8 and 2.7%. The bifurcation was obvious today with two notable laggards, not surprisingly, the staples and utilities. The XLP and XLU lost .7 and 1.2% respectively and the XLU fell more than 1% for the third time this month, a sizable move for the group. Staple names like KMB are now off 14% from recent 52 week highs and it is lower 18 of the last 28 weeks.
Some consumer discretionary names have really come back to life and it is often good to be aware of who the leaders were going into the group crisis, because these stocks are taken out are usually the best to come out of it. We have heard some of the discount retail names are AMZN “proof” since it would obviously be difficult to price them out which Amazon does so well. Below is the chart of BURL and how it was viewed in our Monday 9/18 Game Plan. Wednesday it managed to blast through the 92 number which it had traded above intraday on five separate occasions since 8/24 without a CLOSE above until today. Look for a measured move to 104, which may not slow it down as it could be then added to through a cup base trigger of 104.17, which would achieve an all time high.