Markets put in a quiet session as the Dow is now on a 3 session losing streak, with all 3 CLOSING right near lows for the day. It did nearly achieve a 1250 handle gain following the bull flag breakout above a 23500 trigger (came up about 200 points short) and still looks a bit heavy after Mondays shooting star candle. The Nasdaq put in a decent day recording a bullish engulfing candle just above its rising 50 day SMA after bouncing near the 50 RSI number to remain for the time being in the bullish zone. The Russell 2000 was the laggard Wednesday as it registered its first four day losing streak since late July and is currently retesting a double bottom breakout trigger near 1510. The violent nature in which it has retreated to test the pivot is worrying. I am hearing a chorus of prognosticators explaining this is historical weak beginning of December which should be followed up by strength into the year end beginning next week. Is it too obvious?
Looking at individual groups it was technology that led for a second consecutive session, although yesterday it was barely above the UNCH mark by the close via the XLK. Wednesday it behaved more bullishly with the ETF higher by .6% and for a second straight day finding a bounce of its upwards loping 50 day SMA. Volume could have cooperated a bit more but PRICE action was respectable. Its two next closest winners were odd company with the staples and utilities adding .5 and .4% through the XLP and XLU. The big laggard today was energy with erratic action with the XLE falling 1.3% and falling for 3 days in a row after having trouble CLOSING above the round 70 number recently. It is down 1.8% for the week so far confounding some as last week it stormed higher by 3.2% in the best weekly volume in more than 4 months. It reaffirms the notion that weak groups will tend to stay so longer than many believe.
Technology has been held underwater recently and not many are predicting it to end with the beachball effect and an explosive move higher. That on a contrarian basis alone could propel a move north, but a popular saying charts do not lie, people do could come in handy with this next chart. TWLO was a name that came public with much fanfare last spring advancing 11 of its first 15 weeks, moving from the low 20s to just above 70. Fast forwarding to the present it has dropped 4 of the last 6 weeks, and by 7.7% thus far this week. Its action mirrors that of another highly touted tech IPO ACIA that came public just one month before TWLO and it now trades 46% off its most recent 52 week highs (it as well rose 11 of its first 15 weeks traveling from roughly 27 to 125). Below is the chart of TWLO and how it appeared in our Tuesday 11/28 Game Plan. This could be talked about in the opposite of a leader in a weak group that excels once the group sees some capital allocated to it. TWLO was weak well before the Nasdaq softened up somewhat. Its losses could accelerate even further it technology does not regain its footing. It has broke below a bear flag and has a measured move into the high teens.