Markets put in a quiet session as the dodgy Dow rose .5% as its symmetrical triangle continues to play out, was the best actor. The Nasdaq which came into contact with its rising 50 day SMA on Monday gained .3% and like the S&P 500 recorded a bullish harami candle. The Russell 2000 was essentially UNCH, dropping 5 of the last 6 days, and its failure to reach the overbought 70 RSI number as it has done every other month for the last 6 can be concerning. The VIX lost ground to the tune of almost 2%, but did remain above its 50 day SMA, and another pierce of that line which sits roughly at 17.40, so fast after recouping it could energize the bulls. We did mention the long bearish upper tail it registered Monday and it tended to see big drawdowns almost immediately afterwards. It is a bit worrisome when one looks at the charts of former leaders like an IP which is now 21% off most recent 52 week highs, and looking at a potential fourth weekly decline as this week is lower by 2.5% thus far. That did occur 3 other times in the last year with the weeks ending 3/24-4/14/17, 7/21-8/11/17 and 10/27-11/17/17, but the following week after the 4 week losing streak were all nicely positive as the week ending 4/21/17, 8/18/17 and 11/24/17 all advanced 6.3, 3.2 and 1.3% respectively.
Looking at the individual major S&P sectors Tuesday the leadership was a bit better if you are a bull. Energy was the best performer with the XLE higher by .8%, but the next 3 best actors came from the cyclicals, financials and industrials. Continuing to form it was the utilities, seemingly either at the top or bottom of the leaderboard, lagging as the XLU fell the most by .6% and the staples via the XLP lost .3%. The XLE is still making the case for a bottom in an ongoing potential cup base formation as it trades sideways along its 200 day SMA. The problem for many of these ETFs is that they are combating some real negative candlesticks. Take the XLY, which is holding up in a lukewarm fashion due to strength in select retail names, is making higher highs and lows but has to overcome not one but two bearish engulfing candles from the 2/27 and 3/13 sessions. And to add salt to the wound a doji candles was recorded on 3/12.
The transports always have a keen feeling of the genuine health of the economy. If goods are being shipped around these names will thrive and thats just what they will do. Some facets of the overall group will be stronger than others, but for the most part the sector is acting bullishly. If you want to look at the collective airlines, the JETS ETF is showing a nice cup with handle trigger of 34.22. FDX is doing battle with its 50 day SMA for the second time in as many months, yet that line is now falling. The IYT has been making higher highs and lows since the 2/9 session when it bounced firmly off its 200 day SMA. Below is the chart of CHRW and how it appeared in our Friday 3/16 Game Plan. It is a productive one and it has now broken through its 50 day SMA and I would not be surprised to see it magnetically pulled toward the very round par figure which was stiff resistance on 1/26. Round number theory creating roadblocks, pun intended.