Markets turned decent early gains into losses, going out near lows for the session, classic bearish characteristics, although a late day rally ensued. The Russell 2000 which is generally seen as a leading indicator was hit the hardest with the benchmark losing .5% and it is now less than 2% from its upward sloping 50 day SMA and the line was comforting last November and December. The Dow which was helped early on after BA earnings, the name is the highest priced stock in the index, surrendered all of its gains, and went negative briefly in the last hour, only to finish up .3%. For the Nasdaq it narrowly missed its third consecutive loss, a rare feat and one would have to look back to early December and mid August last year to witness the last time those happened. With that being said the tech rich Nasdaq is still just 1% off most recent all time highs and still more than 300 handles from its rising 50 day SMA, an important line it came into contact with almost every month in 2017 beginning in March. One could consider this action healthy, although we do hear how record amounts of money were recently poured into equity funds. January has become a volatile month and this one lived up to expectations. Perhaps we could use some cooling off as stocks seemed to shrug off any bad news, even among the big cap tech players. We had announcements of AAPL deliberately slowing down its older phones, INTC having major hacking issues with its chips and FB with advertising woes.
Looking at individual groups the utilities are becoming pesky as for the second session in a row they were the best performing major S&P sector with the XLU up by 1.2%. Technology, industrials and financials were the second, third and fourth best actors and maybe that is a sliver lining. Lagging was the healthcare arena which seems skittish after yesterdays announcement regarding some major firms looking to set up their own system sans profit motive. It is most likely best to let the dust settle, but the market has not shown any signs of a long term top yet. The bulls must be given the benefit of the doubt. Staples are not following through to the upside after its recent breakout and that is concerning, or is it just being weighed down by the overall market jitters? Keep in mind the best breakouts work right away and it is often classified in the group of defensive natured sectors with the utilities and they are being left behind, on a very short term basis however. Lets see if the XLP can muster any strength next month. At the moment EL looks like one of the top names in the space.
There has been little in the way of any long winners this week and it is best like I have mentioned previously to gather a list of names, preferably leading ones as always, to see which one are acting best in this environment. That could also come by the way of stocks that are just holding their own and not joining the weakness. Below may be an example of that with the stock SHAK and how it appeared in our Thursday 1/25 Game Plan. Wednesday it ended a four session losing streak and found support at its rising 50 day SMA, often an ideal entry point after a recent breakout. It broke above a long cup with handle trigger of 38.80 in a base that began last June. The casual diner is now 8% off most recent 52 week highs and to me on the weekly chart now has the look of a bull flag formation that began back during the week ending 9/8/17 at the round 30 number. If it can muster some power here add to above a 47 trigger which would carry a measured move to 64.