Markets began Monday in a brilliant fashion but ended anything but. Remember just as in life, and so goes the markets, it is now how you start but how you finish. The Dow ended up more than 200 handles from intraday highs recording a bearish shooting star candle in the process. The Nasdaq slumped 1% reversing more at the round 6900 hard very similar to the 11/29 session. The week started off soft for the tech heavy benchmark and rotation is firmly underway and the week is obviously still very early, but keep in mind if this week were end down, it would be the first back to back negative weeks since mid August. The S&P 500 and Russell 2000 also finished well off session highs after decent intraday gains evaporated. There were some bright spots if one looked deeper with the transports up 1.8% via the IYT, off highs too, and fell backwards after hitting a roadblock at the round 190 number, pun intended. It still well above the cup base breakout trigger of 181.67 taken out on 11/29. Retail showed signs of life, but bears will point to its laggard status. The XRT broke above a 44.20 cup base trigger today and could be primed to move toward a weekly double bottom trigger of 48.36.
Looking at individual sectors there was some clear bifurcation with the financials once again putting on a show with the XLF up 1.4%, and the materials, cyclicals, staples and industrials advancing between .8-1.2%. For the XLF it was its third move of at least 1.4% in the last 5 sessions, making the gain a bit frothy and most likely in need of a pause with sideways trade wanted from the bulls. On the opposite end of the spectrum it was technology that lagged badly with the XLK slumping 1.6%. It is now about 1% from a rising 50 day SMA potential test, which will be interesting to see how its defended. One normally wants to see an orderly decline into the important line where institutions will generally add to a winning position. But the frantic nature in which it is approaching it is not ideal and volume is bulging. It is now back below the 2.2% dump recorded on 11/29. Perhaps we are in for a move seen last in early June where volume exploded as it receded into its 50 day line, and although it did not hold up falling below in late June and early July, the uptrend did resume after a brief lapse. Also showing weakness today were the utility and healthcare sectors.
They say a healthy market should include robust performances but both the financials and transports. It is a bit old school, but in a very simplistic way it makes a lot of sense. If banks are doing well they are it means interest rates are rising and therefore the economy must be humming along. The transports signal that goods are being purchased from consumers that are energized and being delivered. They often have a very nice gauge on economic activity. Below is a name that has a little bit of both of the aforementioned groups as it is a payment play for transporters. Here it is how it was profiled in our Monday 11/20 Game Plan. It broke above the suggested bull flag trigger on 11/30 and is now on a route to the round 200 number, pun intended. It has charged higher 12 of the last 14 weeks and the last 5 weeks have all CLOSED very taut within just 2.15 of each other which suggests a big move is imminent.