Markets were bifurcated Wednesday as the Nasdaq was hit to the tune of 1.3%, while the Russell 200o rose .4%. The Nasdaq dropped hard following yesterdays hanging man candle and on its RSI could be slipping below a nice uptrend line that began in early August. One banking on any window dressing into year end with the tech giants is clearly confounded today, but there is still plenty of time left in ’17. A wise friend of mine pointed out that he figured the Nasdaq would struggle once Bitcoin did so. He is looking genius today, with the huge reversal. The Russell 2000 did record a bearish shooting star and we are now headed into the end of the month and the major averages have been up 10 months in a row, however the gains have been gradual. This could be the first year we go 12 consecutive up months in a calendar year. The bulls can point to today as being rotational as tech imploded, capital was deployed into transports screaming higher by 3.4% via the IYT. Financials and retail also demonstrated strength with the XRT rising by 2.4%. For the week it has added 5.8% and weekly volume is the strongest since the week ending 3/3 already with still two sessions remaining. The bears may point to these types of huge swings as being indicative of potential market tops. December should be an epic tug of war.
Looking at individual sectors it is impossible not to come away very impressed with the action in the financials. The XLF recorded excellent follow through after Tuesdays jump of 2.6%, easily the best performing group today adding another 1.6%. The ETF broke above a 27.03 cup base trigger today and we like to say here the best breakouts work out right away. If this is not a good example I am not sure what is. Perhaps the phrase if it looks obvious, it is obviously wrong comes to mind, but many like to pontificate that a true market rally must see financial participation. This should be a good sign going forward. Of course there was clear bifurcation Wednesday with technology via the XLK slumping 2.3%. We discussed the possible GOOGL implications yesterday with the bearish dark cloud cover and it spilled over to some of its mega cap peers today. AAPL slipped up 2.1% and it did recently fill in a gap on 11/15 from the 11/2 session, but that looks in jeopardy now. AAPL recorded another gap fill aligning with the very round 150 number on 9/25 from the 8/1 session and rallied nearly 30 handles to 11/8 highs, but this recent gap is not behaving in the same fashion.
Healthcare has been acting somewhat better as of late and of course like any other sector it is very diverse. To take a look at two subsectors in the space to illustrate our point lets take a peek at the performance of the IHI, the medical devices ETF compared to the IBB which is a biotech fund. IHI has essentially doubled the return of the IBB so far in ’17 as it has risen 33% to the IBB’s 17%. As well the IHI is just 1% off most recent 52 week highs while the IBB is 9% off its own highs. Below is the chart of ILMN and how it was viewed in our Tuesday 11/9 Game Plan. The stock is higher 15 of the last 20 weeks and by 5.9% this week heading into Thursday. It screamed above a 214.50 bullish ascending triangle trigger on 11/27 advancing 4.2% on double average daily volume, and still has room to run to its measured move of 232. The measured moves are not science, and this name could potentially exceed that and I feel it will be magnetically pulled toward a cup base trigger of 242.47 in a base that began 28 months ago the week ending 7/24/15. A break above there is a blue sky breakout.