Markets took a prudent pause Tuesday as the major averages gave back some ground. The Dow fell fractionally after Mondays bearish shooting star at all time highs and the S&P 500 gave back .3%. The Nasdaq cooled off to the tune of .4%, not surprisingly after hitting the round 7000 number yesterday. Keep in mind though that is has protected its gap up, until recently a rare occurrence, in tidy fashion. Today it filled in one from 12/15, and on 12/6 it filled in one from 11/15 (the gap from 10/27 was never filled as the benchmark kept advancing northward). The Russell 2000 was the laggard Tuesday as the small cap index dropped .8%. It is within the daily range of the 12/4 bearish shooting star of its own from all time highs. No need to put your foot on the accelerator, but certainly hold tight to your positions in cruise control, as there have been no technical reasons to sell.
Looking at individual groups it was economically sensitive sectors that were strongest today as energy and transport plays acted best. Safer bets like the utilities and REITs were the laggards as the XLU recorded yet another 1.8% drop, until recently an oversized move for a defensive group. Technology did lag the the XLK lower by .6% with AAPL, MSFT, FB and GOOGL all losing ground Tuesday. Regarding AAPL it was a day after registering a solid double bottom breakout. We know the best breakouts tend to work out right away so lets keep a keen eye on that one the next few sessions. MSFT too did score a double bottom breakout from a 85.16 trigger and is holding close to it. GOOGL came into today higher 9 of the last 10 days after successfully retesting the very round 1000 figure on 12/5, which now looks to be smart support after being resistance hampered there in June, July and October.
One of the kings of retail has run into a roadblock at the very round par number. That round number theory is something isn’t it? Especially at the 100 figure. WMT was rejected there today and on 11/7 as a long sideways digestion develops. It is digesting nicely the last 4 weeks after the 7 week winning streak from the weeks ending 10/6-11/17, although a flag here may be a bit long in the tooth. Below is an example of a bull flag breakout, which are must successful prone in a shorter duration (chart here is from the Monday 10/23 Game Plan). It is also a good example to buy strength as those that sold into the earnings gap up on 11/17 are surely kicking themselves now. Of course it has not undergone a Bitcoin like move, but this supertanker of a stock has gained ground steadily and paid a decent yield, AND offered nice appreciation. If venturing into this arena have an overweight within the discount plays, as they seem to be acting the best.