Markets registered a solid start to the week with the Dow leading the way higher by 1.4% as CAT put up a reputable gain of more than 3%. Interesting to see just 7 of the 30 names in the index up YTD. The Nasdaq put up its third consecutive decent Monday start after a dismal 3.7% slump on 2/5. It produced advances 1.6 and 1.1% on 2/12 and 2/26 (2/19 was off for Presidents day) and today gained 1% making its three consecutive 1% plus Monday jumps. Of course the old saying its not how you start but how you finish so lets see how the week turns out, but the beginning today was very respectable. AAPL will have a big say in how the Nasdaq acts going forward and it has traded between the round 150-180 figures and the base still has a V shape to it, unattractive, and now it is forming a handle on that pattern. In 2018 it has traded above the 180 number, but has recorded no CLOSES above so that certainly remains the line in the sand. AMZN was presented with problems at the round 1500 figure and was able to recoup that number convincingly today after finishing just .25 above last Friday.
Looking at individual sectors all of the major nine S&P sectors advanced Monday with an interesting 1/2 combo as the utility and financials sectors led with the XLU up 2% and the XLF gaining 1.4%. These two often act in an inverse fashion, but what seems normal in this recent market place. Lagging were the traditional other defensive groups as healthcare and the staples still rose as the XLV and the XLP added .9%, not to shabby for weak groups on the day. Technology via the XLK followed through nicely after touching its 50 day SMA last Friday and recording a bullish piercing line candle. It is the one of two major S&P groups above its 50 day SMA, with the XLY CLOSING just above the important line today. That tells me if this rally has some legs it could have more room to stretch out and run as it would be much more healthier to have more ETFs swimming above that line.
The casual dining space has been weeding out losers, and as Buffett says one can often see whose pants are down when the tide goes out. MCD and PLAY were two former best of breed names now suffering from indigestion, pun intended. MCD is now lower 4 of the last 5 weeks and by 15% off most recent 52 week highs after trading tight as a drum in a uptrend for more than a year the weeks ending between 1/13-17/1-26/18. Below is the chart of BLMN and how it appeared in our Wednesday 2/28 Game Plan. The weekly chart shows it having room to the 26-27 area which was stern resistance in June-July and November-December ’13, February-March ’14 and January-March ’15. It successfully retested a double bottom trigger of 22.49 taken out on 2/22 on 3/1 and filled in a gap from the 2/21 session creating a “cluster of evidence” which a couple or more indicators come into play in the same area. It now sports a bull flag formation and look at add to or start a position above a 24.25 trigger, a breakout that carries a measured move to 28.50.