Markets again hovered close to the UNCH line as it digests recent big moves. The Nasdaq was fractionally higher by .1% and the S&P 500 rose by .2% and the Russell 2000 added .3%. Some big names impacted the Nasdaq with FB and AMZN recording bearish engulfing candles, reversing nice early gains. FB was unable to CLOSE above a 174.10 double bottom trigger that was taken out intraday on Monday recording a bearish shooting star. AMZN came awfully close to its own double bottom trigger of 1000.10 before backpedaling nearly 10 handles (GOOGL was pushed back at the very round 1000 figure on Monday. Other “old tech” names that were soft Tuesday were AAPL which met precise 50 day SMA resistance.
Looking at individual sectors it was the defensive groups that showed the way with the utilities and staples both higher in the neighborhood of 1%. The XLU looks very similar to the early July period where it slipped briefly below its 50 day SMA, only to regain its stride and reclaim the important line and keep going. It went on to gain 6 of 9 weeks ending between 7/14-9/8. The XLP has the look like it may be sorting out a double bottom at the 53 level, and today did recapture its 200 day SMA which is still upward sloping. Lagging Tuesday ever so slightly were the materials and cyclicals.
At ChartSmarter I am a very patient trader waiting for set ups and only taking plays the confirm on PRICE action alone. Many times other are less so and try to participate beforehand the catalyst and often times they are hurt. On other occasions a name will move in the opposite direction of how it traditionally would do and those moves can be powerful. Below is the chart of MULE, a recent software IPO, and how it was presented in our Friday 10/6 Game Plan. Keep in mind markets could care less of your opinion but the anticipated move was a break below a bearish descending triangle pattern and the very round 20 number, but the last 2 days the stock has screamed ABOVE and has now advanced more than 13% this week thus far. It has been accompanied by robust volume, already the third best weekly trade since coming public this March. There is nothing to do here with this name now until it forms a proper base.