Markets put in a robust move Tuesday with the Nasdaq leading the way. It jumped 1.1% and more importantly recorded its second gap up, a rare event for an index, in the last 4 sessions. Not to be outdone the Russell 2000 which has been on a tear roared past a 1510 double bottom trigger gaining .1%. Is the benchmark about to go on another tear similar to last November and this August-September? I have no idea and if anyone tells you with certainty label them a charlatan. It has been following certain patterns and keep in mind this index is often seen as a leading indicator. The S&P 500 was hampered by the round 2600 number, a little like the 2500 number did in mid September. It has now formed a bull flag formation and a move through the 2600 figure will have a measured move of 100 handles.
Looking at individual sectors Tuesday it was a broad rally as all nine of the major S&P sectors advanced. The best performing group was technology with the XLK rising 1%. The healthcare group which has been under pressure as of late was not far behind with the XLV up .9%. Peering deep into the cyclical group into the retail names, they were the only subsector that was meaningfully lower with the XRT falling more than 1% and shying away from a break above a bullish inverse head and shoulders formation with a neckline near 42. Some names in the group imploded after earnings reactions today with SIG and DSW off 30.4 and 13.2% respectively. But their has been some real bright spots recently in the arena including WMT, KORS, BURL, CRI, PLCE and URBN which we profiled recently in this piece. Perhaps we will look back at the newly minted ETF, EMTY and say this was one of the most ill timed creations as it called the bottom in this space. The ETF is designed to track the demise of the retail store.
We have spoken at length about the strength in “old tech” names. As in all markets some names will out or underperform and today we look at a name that lagged, and coming into today was 14% off most recent 52 week highs. It was weighed down by one very nasty drop following an ill received earnings reaction this summer. Sometimes these are a one off situation and the chart below may be a good example of that. The stock has gained ground 4 of the last 5 times following an earnings release, but the one miss was a real doozy perhaps frightening investors. It slumped 18.5% on 8/3, but rebounded firmly on 11/2 adding more than 8% and is now looking for a 5 week winning streak higher by more than 4% this week already. On 11/2 it also recaptured its 200 day SMA which it had been below for 3 months and then retested that line last week and held firm. The pivot was never hit, but an alternate entry point would be above an unorthodox cup with handle trigger of 17.60.