Markets suffered a blow to open the week Monday as the leading Nasdaq took the brunt of the selling dropping 1.8%. The big FANG names weighed with FB alone slumped nearly 7%. GOOGL lost 3% and it is on the retreat after filling in a gap to the upside on 3/12 from the 2/1 session. Both of these tech giants are now underneath their 50 day SMAs whereas NFLX and AMZN are acting much better and above theirs. The Russell 2000 fell 1% and it did bounce today off its 50 day SMA and this is an index we are going to be watching closely as we mentioned in our Monday report. The VIX was the other instrument we wanted to give us clues and today the bulls were not amused with its action. It had been within a stones throw off its 50 day SMA, which is sloping upward nicely and today rammed back above it and this is one of our favorite patterns. It can now be added to above a double bottom trigger of 26.32. Keep in mind it did show a long upper tail today finishing more than 10% off intraday highs. Todays action looks similar to the 2/6, 2/9, 3/1 and 3/2 sessions.
Looking at individual groups there was no escaping the carnage Monday, but it was the defensive utilities that fell the least, and their outperformance is becoming a little hard to ignore recently. The XLU fell .6% an it was its sidekick the staples via the XLP that was the fourth best actor as the ETF lost 1% (the industrials and financials both fell .7% to tie for second best group). The question as of late is where has the leadership come from, and many occasions it emanated from lagging sectors, and is a big problem to ignore. The bulls would have a hard time defending this day in any fashion, especially with technology slumping the hardest as the XLK slumped 1.9%. On the XLK chart foreshadowing came with a rare, bearish doji candle on 3/12, the likes of which often indicate at least a pause in the prevailing direction, if not an outright reversal. Not surprisingly it recorded a bearish engulfing candle at all time highs the very next day.
Looking at former best of breed names that try to recapture former glory is often a futile exercise. Some come to mind like DECK, but these are very few and far between and trying to fight a negative trend can be a very painful experience. Below is a name SBUX and how it appeared in our Thursday 3/15 Game Plan. It has to be given credit for a decent comeback but it seems to be floundering somewhat here. Heavy volume weekly losses have been piling up now and that is often a sign of an institutional footprint as they attempt to unwind large positions. It has repeatedly run into trouble just above the round 60 number dating back to late 2015. In addition the candlesticks have offered some evidence of some possible weakening going forward. It recorded a bearish shooting star on 3/13 that filled in a gap to the upside from the 1/25 session, also CLOSING below the round 60 number.