Markets rose across the board with some clear winners as the Russell 2000 continues to confound, but to those who keep things simple its uptrend is firmly intact. There seems to be a floor at the 1490 level and a ceiling at the 1510 number. It will resolve itself very shortly and could give important clues as to the direction of the overall benchmarks. The Nasdaq is now higher by more than 200 handles from its rising 50 day SMA and perhaps a rush into names that managers were not exposed to to save face into year end window dressing is about to commence. As we mentioned yesterday November tends to be a positive month historically, and maybe investors are becoming to complacent with the expectation of gains going forward. Now is a better time than ever to turn off the media and just focus purely and simply on the direction of the major averages.
Looking at individual sectors it was a rare win for the staples group with the XLP posting a .8% advance, the best actor Tuesday. The ETF is on the verge of registering a bearish death cross, although the validity of that event is not as potent as many make it out to be. The XLE was the third best performer as it rose by .3% and it seems to be following crude’s lead which has been acting very well since WTI broke above a bullish inverse head and shoulders formation which aligned with the very round 50 number. Tuesday the ETF found nice support at a rising 50 day SMA which also was retest of a long downtrend break to the upside (bears seemed to be unable to press much to the downside). Lagging, but ever so slightly were healthcare, financials and industrials which are all in need of a prudent pause.
The markets have been shunning defensive plays, with the exception of the utilities, but keeping an eye on what names are outperforming could be fruitful. Specifically in the food space since the AMZN purchase of WFM, many in the arena have traded rottenly. Below is the chart of TSN and how it was profiled in our Wednesday 10/25 Game Plan. It has out shined peers such as HRL which still sits in bear market mode lower by 20% from most recent 52 week highs (FDP is now off more than 34% off most recent 52 week highs). TSN is a name that continues to march northward and today rose above a bull flag trigger of 72.25 which carries a measured move to the round 80 number. Keep in mind measured moves are just guidelines where investors could shave positions and a glance on the weekly chart shows this name sniffing out a 14 month cup base trigger of 77.15 which began the week ending 9/9/16. A break above would record an all time highs. Regardless of the industry your name is among, monitor the PRICE action alone to dictate what your trading decisions may be.