Markets were throttled Monday, after a somewhat benign session last Friday that did CLOSE well off intraday highs late. The “leading” Nasdaq is now LOWER on a YTD basis after today and Mondays have become very volatile as 3/26 ROSE 3.3% and today dropped by nearly the same amount. The tech rich benchmark is now lower by 10% off most recent all time highs and is now roughly 100 handles above its rising 200 day SMA. All the talk was about the softness in AMZN, but the semiconductors fell by 4% and biotech by 5% as both the SMH and IBB are trading near the very round par figures. The S&P 500 was unable to finish above its 200 day as it slumped 2.2% for the first time in two years. Will it be a bear trap? That remains to be seen but this erratic trade is anything but bullish and the VIX exploded by nearly 20% today as it attempts to break above a 26.11 double bottom with handle trigger, although it continues to reverse near the 25 number. It has been acting very well since the successful retest of the 15 cup base trigger on 3/9.
Looking at individual sectors it was no surprise that none of the major S&P groups rose Monday, and also that the utilities were the best performer. The XLU is still doing battle with the very round 50 figure, and its 50 day SMA looks like it wants to slope higher for the first time in months, but also has the look of a bearish falling wedge, not surprising given how soft the group has been overall. The ETF still dropped .8%, but far outdid any of its peers as all of the other 8 lost between 2 and 2.9%. Technology was among the hardest as the XLK lost 2.5%. The ETF has now declined an amazing 11 of the last 14 sessions and 6 of the last 7 days have moved 2% in either direction as volatility remains elevated. It has remained above its rising 200 day SMA for two years now, and it seems everyone feels a retest will be successful. Well we all know what usually happens when there is a consensus.
At ChartSmarter I am huge believer in CLOSING prices as I often if not always capitalize the word. The adage goes the real holders let there positions known by carrying overnight. Of course they hold them for numerous nights, perhaps months or years into the future. Below is the chart of a material name VSM and how it appeared in our Friday 3/9 Game Plan. The stock is currently 14% off most recent 52 week highs and one can see how the round number theory came into effect as well with no weekly CLOSES above the 40 figure since the week ending 11/3/17, even though the last 4 weeks traded above 40 or within pennies. On a daily basis there was just one CLOSE above on 1/23. Those who tried to front run the good looking double bottom trigger of 40.27 are not underwater sizably on a capital basis and perhaps even more so on a mental capital basis too.