Markets screamed higher Monday and the beginning of the week has been very strong on both the upside and downside. The Dow for example fell 4.6% on 2/5, on 2/12 rose 1.7%, on 2/20 fell 1% and today rose by 1.6%. The Dow was a big winner today as it easily outshone the other major indexes with the Nasdaq and S&P 500 advancing 1.2%. The Russell 2000 gained .6%, finally CLOSING above its 50 day SMA which has plagued the benchmark and also broke through a bull flag formation of 1550 which has a measured move of 110 handles. It was surprising that the Nasdaq did not outperform as the semiconductors where one of the best industry actors today with the SMH up 2%. Transports were firm, and the averages were helped along with the 10 year yield dropping for a third straight session, something it has not done since the beginning of last November. On its weekly chart the TNX recorded a bearish doji candle the week ending 2/16 followed up by a shooting last week. It has the potential to retest a cup base breakout trigger in a year long pattern just above 2.6% in the first half of this year.
Looking at individual groups it was technology and the financials that led, with both the XLK and XLF rising in the 1.5% neighborhood. The XLK has now fully recovered all of the big losses from the steep correction in the rapid 5 day period in early February. Many have been saying this will be the critical retest once the former highs are retested. It will be interesting going forward the rest of the week to see how the sectors behave. As far as a technical entry on the XLK the cup base trigger of 69.29 has a V shape to it which has been known to be failure prone. The industrials rounded out the top three, and the XLI is higher 10 of the last 11 sessions and is now 3% off its most recent 52 week highs. It is narrowing in on the round 80 number where it recorded a bullish 3 week tight pattern the weeks ending between which all CLOSED within just .97 of each other. Lagging Monday were the utilities and materials as the XLU was the only of the major 9 S&P sectors to lose ground today. It was rejected at a heavily sloping downward 50 day SMA.
Recent new issues are always a good place to mine for potential winners for a variety of reasons. They are often under followed, except for the underwriters who tend to promote them after the quiet period is over, ad quite frankly many like to avoid these situations until a proper base has formed. IPOs tend to trade wide and loose as liquidity is often an issue, so if one can identify a stock that tends to trade somewhat tighter a possible winner can be uncovered. One name that fits the bill is OKTA, and below is the chart and how it appeared in our Wednesday 2/21 Game Plan. It is a cloud play that came public in the spring of ’17 and looks like it is headed for a double as it has advanced 7 of the last 9 weeks and broke above a 33.74 cup base trigger that began the week ending 9/15/17 and was taken out the week ending 2/16 which was higher by more than 20% (the week ending 2/9 lost 1.5% CLOSING in the upper half of the weekly range as the Nasdaq plummeted more than 5%). Accumulate on any low volume pullbacks.