Markets are extended a bit no question, but that does not mean they can not achieve greater heights heading into the strong seasonality year end. Keep in mind holiday shortened weeks normally lean toward the bullish angle so not this week but into Thanksgiving the following week we can see some grind higher strength. The major indexes have been demonstrating some classic bullish behavior starting on lows and going out on their highs and today was no exception. The bears seem to have the bulls on the ropes but just can not manage to record any follow through. Sure the gains today were modest at best, but they did fend off early weakness. The Russell 2000 which I like to focus on did register yet another nice long lower tail resembling a dragonfly doji Monday as the tug of war continues at the rising 50 day SMA as bull and bears dig in deep there.
Looking into individual sectors it was a defensive flavor once again to start the week with the utilities and staples garnering most of the attention. The XLU was the best performer rising 1.2% followed by the staples with the XLP putting up a respectable .6% advance. The XLU broke above a cup base trigger of 56 Monday, although the cup is a bit V shaped which does tend to be failure prone. The ETF is looking for a seven week winning streak this week and put in a decent start (the prior 6 rose by a combined 4.4%). The XLP is seeing a nice move with 3 of the last 5 sessions recording a move better than 1%. Lagging today were the energy and industrials with both losing .6 and .3%. I see many targeting weakness going forward in the energy space, but the XLE has risen 9 of the last 12 weeks and 7 of those 9 up weeks rose by more than 1% and to me that is some silent accumulation occurring.
Materials have behaved in a decent manner recently. Looking at the XLB it recorded a bullish engulfing candle right off its upward sloping 50 day SMA Monday for its initial time after a recent break above a cup base trigger of 56.02 on 9/17. That is often an excellent opportunity to initiate or add to one position. Peering into individual names in the arena below is the chart of TECK and how it appeared in our Wednesday 11/1 Game Plan. This name is still 18% off most recent 52 week highs, and we do like to buy strength normally but this name bounced right off the very round 20 number on 10/27 producing a bullish counterattack candle. It has since recaptured its 200 day SMA and today battled with its 50 day and had issues CLOSING above. A double bottom pattern is taking shape and a peek on its weekly chart shows a history of trouble near the 26 level. It touched that number last November and December and again this January and February. This is a name to keep a close eye on heading into the first quarter of next year and possibly beyond.