Markets screamed higher Wednesday after an morning fall after inflation data was reported. To me the early on tell was the VIX being lower as the major averages dropped as the bell rang. They quickly reversed, and it was the Nasdaq that impressively led advancing 1.9%, and it reclaimed its 50 day SMA. For the fourth consecutive session it CLOSED in the upper half of its daily range and it looks as we could potentially have another V shaped recovery. Also a good clue was the Russell 2000 being the first index to enter the green and we know that is often a good indicator. All of the four previously mentioned benchmarks are about to enter the bullish zone above the 50 RSI number, and if they are successful in doing so could lead to further gains. The 10yr yield climbed above 2.9% today, which is near the level that exacerbated the recent sell off. Good news being interpreted as good news? What a novel idea.
Thursdays action was just what the bulls wanted to see, led by financials and technology. Conversely the defensive staples and utility sectors were shunned today as the XLP was flat and the XLU slipped 1.1%. Banks deposited firm gains, pun intended, and the XLF is on a 4 session winning streak after last Friday successfully filled in a gap from 11/28/17, and it recaptured its 50 day SMA in the process. The FANG names have been cooperating handsomely. AMZN is higher by more than 100 handles this week after last Fridays bullish hammer candle precisely off the upward sloping 50 day SMA. AAPL is up nearly 7% this week headed into Thursday after a nice double bottom was put in at the very round 150 number last Friday with the 9/25 session (the 9/25 session also filled in a gap from 8/1/17).
Below is the chart of OLED and how it appeared in our Wednesday 2/7 Game Plan. It illustrates a few different, important factors. Number one weakness was potentially on tap after its failure to remain above its cup base breakout trigger of 192.85 taken out on 1/8. The best breakouts tend to work right away, and it did burst higher by another 20 handles but soon fizzled out. The stock went on a 3 week losing streak that fell a firm 33% the weeks ending between 1/26-2/9. Candlesticks are often very good at picking out short term tops and bottoms and a bearish engulfing candle on 1/19 led to the downside we just mentioned. On the bull side, the bullish engulfing candle on 2/6 took place in conjunction with the upward sloping 200 day SMA, which was retested with a harami on 2/9 again at the 200 day SMA, what technicians would call a “cluster of evidence”. Today it jumped 9% and still lies 24% off most recent 52 week highs.