Markets fell firmly Tuesday and any attempts to cut into the heavy losses were very short lived. The Dow suffered the most of the hit falling 1.4% followed by the S&P 500 dropping 1.1%, the Russell 2000 by 1 and the Nasdaq by .9%. There have been a few harbingers to the weakness with the transports as the IYT is now 4% off its most recent 52 week highs after its bearish engulfing candle on 1/16. Joining them were the semiconductors, as the SMH is still above its cup with handle breakout trigger of 104.06 but it looks like the move is unraveling pretty quickly. Very glaring and not receiving the attention it deserves is the swift swoon of the homebuilders. Looking at the ITB it is off a rapid 7% off its most recent 52 week highs and although today recorded a bullish hammer candle it did slip below its 50 day SMA for the first time since last September and is now on a 6 session losing streak. Perhaps all the chatter about higher interest rates are not only hurting this group, but the overall market as equities are witnessing some competition for the first time in awhile.
Looking at individual groups there was some very light bifurcation with the utilities the only major S&P sector to advance with the XLU advancing .2%. All of the other groups fell with healthcare and energy slumping as the XLE and XLV lost more than 2%. The XLV recorded a rare gap down as AMZN BRKB and JPM announced they were looking for another route in the expensive healthcare costs for their own employees. The ETF registered a bearish gravestone doji candle on Monday and today demonstrated string follow through, not the kind bulls want to see. The handle on the XLE we had believed was in the process of forming now looks to be a bit faulty. The ETF has now slipped 8 of the last 11 sessions, beginning with the bearish engulfing candle from 1/16. Chartists like to see light volume accompany the handle, today was anything but. The XLE is now off a quick 5% from recent 52 week highs, another concern as one wants to see price decline at a gradual pace in the handle.
In the midst of todays selloff one would do themselves a service to see which names behaved well and shrugged off the softness. Below is a prime example of PSTG and how it appeared in our Thursday 1/25 Game Plan. Today it ended up UNCH, much less than that of the Nasdaq, the opposite of what one would have expected as individual names will tend to drop more then the benchmarks they are most likely related to. Tuesday it finished well off session lows, and in the green for an eight straight day, registering its second consecutive CLOSE above the very round 20 number. On its weekly chart one can see that this area is significant as when it came public back in October ’16 it hesitated there and eventually began to drift south. It was cut more than half to trade in the low 9s in March ’17. The stock broke above a cup base trigger of 19.37 on 1/25, jumping more than 4% on very active trade and has propelled higher, just what one wants to see following a breakout (the best ones tend to work out right away). Now one can look to add above a much longer cup base trigger of 20.70 which began the week ending 10/16/15 and would record an all time high.