Markets went out on highs for the session Thursday with the Dow leading the way higher by .4%. It CLOSED just above a 23500 flag trigger and recorded a bullish hammer candle in the process. Shows why candlesticks are secondary to price action. The Russell 2000 is trying to heal itself somewhat after yesterdays failed flag breakout and it rose by .3%. The Nasdaq and S&P 500 finished near the UNCH mark with the Nasdaq lower by almost .6% at it worst for the day, a decent recovery. Of course AAPL reports numbers after the close and we will see how that impacts the tech rich benchmark tomorrow. Keep in mind the Nasdaq is looking for its EIGHT consecutive Friday advance. For the week heading into Friday the Dow is the best actor up .4%, the Nasdaq by .2% and the S&P 500 is UNCH looking for a third consecutive very taut weekly CLOSE. The S&P 500 is potentially setting up for and eight straight weekly gain, which has occurred just once in last 14 years.
Looking at individual groups the financials deposited the best gains Thursday with the XLF higher by 1%. There was some bifurcation as their normally is within the major S&P sectors and the cyclicals and materials both slumped by .7%. Drilling deeper into the cyclicals though witnessed strength with consumer names. There were some absolute disasters with NWL reporting earnings, and coming into this week was already down 12 of the last 15 weeks and this week heading into Friday has lost a quarter of its value, and making it crystal clear that trends in motion tend to stay that way either up or down. APRN which should have never came public and never recorded a weekly CLOSE above the 10 number is now 66% off its recent highs, not a typo. On the other hand retail names RL and LB did gain 2.6 and 8% respectively.
The old adage goes “the best breakouts work right away”, and of course their are exceptions but it is pretty much the rule. One certainly does not want to see a breakdown quickly following a breakout as that is a red flag and a sell first and ask questions later attitude. There will be situations where a breakout will consolidate and digest and although this is acceptable one really wants to see momentum develop almost immediately after. Below is a prime example of this with the healthcare play NBIX and it is the chart from the Friday 9/1 Game Plan. The 55.32 cup with handle trigger was taken out on 8/31 advancing more than 5% on hefty trade and it has never looked back. The chart is a bit different than one normally sees within the healthcare sector as it has traded tight and made small staircase moves up and today took the elevator UP after a well received earnings report which saw the stock fly higher by nearly 20%. Volume is energetic as this week already with one more session to go has already recorded the best weekly trade in 5 months.