Markets ended the week on a high note on huge trade, of course due to quadruple witching. One could attribute the gains to the likelihood of tax reform too, but PRICE action was solid. Leaving a nice taste in the bulls mouth for the weekend was the outperformance of the Nasdaq and Russell 2000. The Nasdaq we have discussed recently with the 6900 number being an impediment. Bulls want to see that former resistance become support and it is now just 1% from a very round 7000 number. Keep in mind Fridays have been kind to the tech heavy benchmark since September gaining ground 13 of the last 16. The Russell 2000 was the star Friday adding 1.5% after a nice bounce off the 50 day SMA. We spoke of liking moves without being news related and next week will be key to see some follow through. Was todays move engineered from tax cuts and expiration? The Dow is higher 14 of the last 17 weeks and gained .6% this week, the S&P 500 gained .9% and the Nasdaq 1.4%.
Looking at individual groups eight of the nine major S&P sectors gained, with the only one left out being energy with the XLE losing fractionally by .1%. It is on a 4 session losing streak and fell .6% on the week and wake me up if and when it CLOSES above the 70 number. The leaders Friday hailed from the technology, staples and healthcare with the XLK, XLP and XLV all adding 1.1%. On a weekly basis the clear winner was technology with a 1.5% gain and the XLK has advanced 7 of the last 9 sessions after a successful retest of its rising 50 day SMA on 12/5. Other honorable mentions were the staples and discretionary with the XLP adding .5% this week and now on an impressive 7 week winning streak and acting great POST breakout from a double bottom trigger of 55.88 taken out on 11/30 and has now formed a bull flag and a move above 57 could catapult the ETF another 5 handles. The XLY rose .7% and is on a 6 week winning streak of its own and since the beginning of November has fell just 6 days. Lagging for the week were the utilities with the XLU subtracting 1.5% after a loss of 1% the prior week.
Retail continues to impress as the XRT is now higher 4 of the last 6 weeks, and three of those advancing weeks rose more than 3% including the week ending 12/1 which jumped almost 5% in the best weekly volume since the week ending 5/17/13. On the ETF’s daily chart one can make the case that it jumped above a bullish inverse head and shoulders trigger of 42 which carries a measured move to 46. More recently it has formed a bull flag and now a move above and CLOSE as always through 45 should give this a move of 7 handles. Below is the chart of Tapestry, the former COH, and how it appeared in our Monday 12/4 Game Plan. I must admit the only thing I hate more than a name change is a reverse split. But PRICE action is our only compass and this stock has moved above a bullish inverse head and shoulders formation of its own on 12/13 and now has registered three straight CLOSES above its 200 day SMA. That important line has been inclining since May and that is a very good sign.