Markets began the week on firm footing as the Russell 2000 was the standout rising 1.2% and is now on a 7 session winning streak and higher 23 of the last 29 days. The V shaped cup base I was concerned about 60 handles ago, as the often are failure prone, is now a thing of the past and a good reminder to focus strictly on PRICE action. The Dow rose .7%, the S&P 500 by .4% and the Nasdaq by .3%. The supposed “big four horseman” FANG names were all LOWER today, albeit fractionally so with FB off by .8, AMZN .2 and GOOGL by .6%. NFLX fell the hardest off by 2.4% recording a bearish engulfing candle not long after it was rebuffed at the round 190 figure after attempting to break above a 191.60 cup base trigger. It is now nearing correction mode off 8% from recent all time highs and today CLOSED below its 50 day SMA and has not stepped up since the weak 9/25 session which slumped 4.7%. Perhaps the market is showing it can survive without these aforementioned stocks.
Looking at individual sectors it was materials, healthcare, financials and industrials that were the clear leaders with all gaining at least .7%. Notice it was a diverse bunch of groups and a good sign going forward into year end. Lagging were the energy and staples as they were the only major S&P sectors to fall Monday. In the materials space it were the weak names that led with KS and CLW posting the strongest gains, and be careful as they off 11 and 26% off most recent 52 week highs. One positive CLW has going for it, although it is a bit illiquid, is CLOSING above the round 50 figure today for the first time since 4/20 (big paper rolling day, pun intended) as it touched the very round number numerous times in July but failed to finish above. Look for a couple consecutive sessions doing so before committing capital.
Peering into other names in the materials sector one has to be impressed with the price action today in RS. Below is the chart and how it was viewed in our Friday Game Plan last week. It registered numerous failures at its 200 day SMA the last few months but today was able to bust through higher by 2.4%. Volume could have been more cooperative, but it is now 12% off most recent 52 week highs but on the weekly chart one can witness a smooth, rounding bottoming process. On the RSI after today it is now at its highest level in the last 6 months. Its chart looks similar to that of peer ZEUS which broke above its own 200 day SMA on 9/20 (which coincided with the very round 20 number) but lasted just one session. Today marked its fourth CLOSE above the important line. X is on a 6 day winning streak, and perhaps the weak group is overdue for some needed strength.