Markets enjoyed another lukewarm, bullish session as all the major benchmarks advanced. The Dow recorded another triple digit gain, and would be 3 for 3 this year if 1/3 would have gained a couple more points. Most encouraging is the Nasdaq’s 2.5% advance this week so far heading into Friday. The tech heavy index only registered two other 2.6% weekly gains in 2017, the weeks ending 1/17 and 7/14, and a 2.7% jump the week ending 9/1, so a gain tomorrow can really show how it is flexing its muscles. Couple that with the break above the very round 7000 number and growth investors are feeling sanguine. It will pay to keep an eye on the Russell 2000 which is often considered a leading indicator as it possibly recorded a double top at the 1560 number with today and the 12/4 session (both days reversed off session highs with 12/4 registering a bearish shooting star at all time highs).
Looking at individual sectors the financials came out of their very temporary hibernation as the XLF rose by 1%. The ETF was somewhat undecided if it wanted to break above a 28.50 bull flag trigger but it has been acting strong lately. The utilities that demonstrate one of our favorite phrases, trends in motion are more likely to persist than reverse (in both directions) fell .8%. The XLU was the only major S&P sector to lose ground Thursday, and it is now in correction mode down 10% from most recent 52 week highs and firmly underneath its 200 day SMA. One could say with authority markets acted somewhat rationally, a rare event these days, with those aforementioned sectors often acting an an inverse fashion. Technology is giving bulls reason to cheer as the XLK is a perfect 3 for 3 in 2018 advancing 2.6% for the holiday shortened week thus far. Energy continues to impress as it has gained 3.8% this week so far and retail is following suit, an anomaly, but a trend that must be respected until it no longer lasts.
We are all aware that the commodity space has been acting very well overall with oil and copper just to name a couple examples. This is indicative of economic strength both here and abroad. Things acting in symmetry. Now in bull markets, the saying is a rising tide lifts all boats, but the best investors will be able to identify names that are superior. Some names may advance 20%, but others could really excel and jump 50-100% or more. In the agriculture space it is easy to decipher which name is the general. Below is the best breed stock CF and how it appeared in our Tuesday 12/19 Game Plan. Over the last one year period it has gained 32%, compared to peers POT which has added 13% and MOS which has LOST 13% during the same timeframe. People like to play the mean reversion game or laggards will catch up, but I believe in buying strength as names are firm for a reason. CF is on a current 6 week winning streak and likely to make it seven as it is higher by 2.5% this week headed into Friday. I would not be surprised to see this name travel toward to the round 70 number, which represents it all time highs recorded the week ending 7/17/15, at some point in 2018.