Markets did display some decent resilience on “hump day” as the major indexes cut into early afternoon losses. The Nasdaq was down 1.2% intraday, the worst of the major benchmarks, but did manage to cut its decline by more than half by the end of the session. The truth be told it was a soft session and the bearish engulfing candles on Monday loom large. As the saying goes, its not where you start but where you finish implies. There will be a slew of earnings reports Thursday, and investors will be keeping an eagle eye on how Friday CLOSES. For one the Dow was 1100 handles above its rising 50 day SMA and there would be little damage to the uptrend with a prudent pullback. The Russell 2000 that will continue be in our focus, and did record a bullish hammer today as the bulls stepped up to defend the flag that is flying. The S&P 500 did as we mention previously did record a bearish engulfing candle Monday and a doji Tuesday which if it was at a bottom would be a bullish harami candle. Stay tuned.
Looking at individual sectors the selling was indiscriminate as all of the major S&P sectors fell. The “best” performing group was healthcare as the XLV slipped .1%. The energy and industrial groups were the worst actors with the XLE and XLI losing .75 and 1% respectively. The contrast between these two aforementioned sectors is quite large as the XLI is just 1% off most recent 52 week highs, while the XLE is 14% off its own. In the industrial arena there are stalwarts such as CMI which is on a powerful 9 week winning streak, but running into problems with the round 180 number with a spinning top candle recorded on Tuesday there. the stock is down just 12 sessions in the last 2 months coming into Wednesday and it is still comfortably above a 170.78 cup base trigger taken out on 10/3 and notice how the round numbers have been influential with the 150 figure acting as support in that cup base on 8/18.
Agriculture names have been capturing the attention of investors recently, after some tough times over the years. A good example of the ongoing recovery in the space can be witnessed by the ETF MOO which is on a current 9 week winning streak, up a gradual 7.5%. It could complete a very bullish 3 week tight pattern as the last 2 CLOSED within just .12 of each other, and this week thus far is essentially UNCH. Below is the fourth largest component in the fund, ADM and how we profiled the name in our Friday 9/22 Game Plan. What is bullish about this name is that it has retested the head and shoulders breakout and the 200 day SMA twice in the last week and bounced firmly recording hammer candles on 10/19 and today. A golden cross looks like a strong possibility here, although we tend to discount the power of that occurrence. If ADM can climb above the 44 level, that would be very bullish as it registered just one CLOSE above since 5/1 on 9/18. It did finish at 44 precisely on 10/13.