Markets roared higher Wednesday more than recouping Tuesdays big reversal and then some. Keep in mind this type of wild, volatile trade is often indicative of topping action, as opposed to nice slow, tight trade that one tends to see as a bottom rounds. Let me be clear I am not making a prediction of a big down move, but we all know anything can happen. This can keep going too. The benchmarks, like individual names, registered some nasty candles Tuesday and they often have meaning, but at the same time one session does not kill a trend. If we end up seeing some negative weekly or monthly candles in a couple weeks that could be much more alarming. The engulfing candle Tuesday on the IYT was concerning as it occurred at all time highs and has been one of the more durable areas. Becoming less disturbing is the action in the semis which seem to be reestablishing themselves as the SMH recently looking wobbly, broke today above a good looking cup with handle trigger of 104.06 on firm trade gaining almost 3%.
Looking at individual sectors it was refreshing for bulls to see technology back in the top spot as the XLK rose 1.5%, its best jump since 10/27/17. Perhaps less focused on because of the defensive nature, and less volatile is the move in the staples this week so far. The XLP has risen 1.6% and this could be the start of a very healthy move for the sector. Keep in mind the last 6 weeks all CLOSED very taut all within just .34 of each other. This type of tight trade can lead to explosive moves so this space is definitely one to keep an eye on this quarter and beyond, IF the breakout sticks. There were no real laggards as todays rally was broad in its nature, but the materials, industrials and cyclicals “only” added .5% Wednesday. Energy, the most robust space added another .9% via the XLE and its move has been just relentless. Maybe it will not add a handle on this long cup base we have been talking about almost everyday and just blast through the 78.55 trigger.
It is rare but some former best of breed names do come back from the dead. Today we will look at a name from the healthcare group that after slumping underneath the very round par number the week ending 4/29/16, dropping 13.5% in elevated trade, it fell 34 of 60 weeks to the week ending 6/16/17. The charts complexion has become much nicer after the very next week ending 6/23/17 which rose 10% on more than double average weekly volume. It has found support at its now rising 200 day SMA several times since last November. The last 4 months have been digesting a strong 3 week winning streak that rose 17.4% the weeks ending between 8/25-9/8/17, including a 13.5% jump the week ending 9/1 scoring its best weekly advance in more than 5 years. It is higher by 3.4% this week already heading into Thursday and that is AFTER the last 2 gained a combined 10%. The stock is now above the round 80 number and gradually gravitating to a cup base trigger of 86.37 which would be an add on entry.