Markets reversed Wednesday and the Nasdaq looked to take the worst of it recording a bearish engulfing candle at all time highs. The tech index lost .6% after being up as much earlier in the session. Looking at the VIX I did notice yesterday it bounced off its 200 day SMA and has now recorded its seventh consecutive CLOSE above the long term moving average. The last 2 occasions that happened in November it registered six finishes above and sliced its 200 day SMA like a knife in hot butter. More recently it scored four CLOSES above in December and again its 200 day provided zero comfort as it sank below it again. Can this time be different? The current action is much more bullish as it looks to solidify there, perhaps the only negative is the instances last November and December hit 14.5 intraday before reversing hard. This time did not touch 13, but that may be considered bullish as it now looks to consolidate here. The Nasdaq and Russell 2000 lost .6 and .7% respectively, and the S&P 500 was near UNCH and the Dow rose .2%.
Looking at individual groups as one would expect their was some bifurcation. The financials and materials led with the XLF up .6% and the XLB by .4%. The XLF has now touched the round 30 number, its measured move after its bull flag breakout from to start the year. That by no means is a sell signal, however if that was you entry catalyst perhaps you want to shave a portion of your position. The XLB now shows a bull flag pattern of its own and a CLOSE above 64 could send the ETF to 69. Lagging were the utilities with the XLU losing .6% and holding the very round 50 number once again, although it did record a bullish harami candle Wednesday, but the overall trend there is ugly. The worst performer on the day was technology with the XLK down .8%. The ETF like the Nasdaq recorded a bearish engulfing candle after Tuesdays spinning top candle, which like the doji could portend a potential weakness in the prevailing trend.
We rarely talk about gold names here on ChartSmarter, but one has to give credit where it is due. The GLD broke above a 128.42 cup base trigger today and recently put up its first 5 week winning streak since June-July ’16 period, as the weeks ending 12/5-1/12 rose by a combined 7%. One argument in the group is to buy the ETF and avoid single stock risk, with potential mine explosions, corporate malfeasance, etc. But those looking to generate alpha, NEM is higher by 11% YTD compared with the GLD up 4%, they could play best of breed names in the space. Below is the chart of NEM and how it appeared in our Thursday 1/18 Game Plan. The stock recently broke above a 39.73 cup base trigger on 1/12 and refused to buckle. It did not advance like you would like to see a successful breakout do right away, and today recorded consecutive CLOSES above the round 40 number for the first time since the fall of ’16. Keep an eye on this one as it looks to want to move toward an add on buy above a cup base trigger of 46.17.