Markets continued their winning ways Thursday as technology outperformed very strongly once again as the Nasdaq rose 1.6%. The benchmarks even were pushed down after a decent open, and a lot of the bears came out before they gained their footing and marched higher. The Dow and S&P 500 CLOSED just above their 50 day SMAs, and if they can gain Friday would make it a perfect 5 for 5 this week heading into a traditionally bullish holiday shortened week. For the week headed thus far the Nasdaq has recouped all of last weeks outsized losses up 5.6%, the S&P 500 by 4.3% and the Dow has added 4.2%. The PRICE action is hard to ignore, and it has been as swift to the upside and it had been to the downside, but obviously people tend to complain less if they are making money long. I would not be surprised to hear the bears starting to voice their frustration even louder in the very near future, claiming volume is tepid at best this week (which is true), one sees these kind of violent snap backs that can be described as hallmark bearish activity. And finally they could hang their porridge hats on the fact that the real bottom feeders are beginning to show frothy behavior. UAA this week is up by one third, and FIT is up more than 5% this week (talking about health anyone remember VSI and GNC lower by 60 and 81% off their most recent 52 week highs). Even APRN attempted to join the party this week, but that has been stamped out so far.
Looking at individual groups Thursday it was almost a complete flip as to leadership today compared with Wednesday as the staples and utilities were the only major S&P sectors to fall. Today there were in the top three with technology sandwiched in between and it was the dull utilities that shined with the XLU dead catting a 2.2% advance. The ETF is looking for just its third weekly gain in the last 11 and one should not be surprised if it is rejected at the very round 50 number which was the trigger in a bear flag pattern. Talking about technology, the XLK is higher by 5.9% and if that gain holds tomorrow would be its best weekly gain in years. Lagging today was energy as the XLE was the only major group to lose ground falling .3%. Not sure the space got the memo the rest of the market is ripping, but keep an eye on FANG as it demonstrated excellent relative strength and has risen more than 13% this week heading into Friday.
We can not stress enough the importance of mining for names that held up well during the recent, “missed it if you blinked” correction. Many charts reset and those that did not have comfortable gains with a good basis were most likely stopped out. I expected a much longer time and process for the recovery to transpire, but it is ending almost as quickly as it began. Astute investors had cash on the sidelines and a well prepared watch list. First and foremost names should have been littered on that list that held up best during the struggle. Some did so by trading sideways and forming bull flag formations. Below is the chart of HLF and how it appeared in our Wednesday 2/14 Game Plan. It formed its flag with help of a round number which also was retesting a prior cup base breakout, solidifying the pattern. The stock broke above the trigger on Wednesday and still has a long way to go before it meets its measured move. Keep in mind it REPORTS earnings next Thursday.