Markets were up and down a couple times Tuesday, but throughout the Russell 2000 led and ended the session higher by 1.3%. The Nasdaq added 1% and was negative with less than 90 minutes to go. AAPL recorded back to back bullish hammers today, and AMZN did the same thing last Thursday and Friday and today registered a bullish harami. To be very clear there is still lots of work to be done as both of the aforementioned stocks remain below their 50 day SMAs, and FB is still swimming underneath its 200 day SMA. Obviously they have a huge factor on what the Nasdaq does. We continue to monitor the Russell 2000 and the VIX for clues. The Russell did bounce off its 200 day SMA for the second time Monday and showed some decent follow through. It recorded a nice inside day, although it was easy give the 40 point range Monday, and to be fair, it did so on 3/26 only to continue slumping. The VIX fell Tuesday but remains comfortably above its 50 day SMA which is nearing the very round 20 number. Just four months ago it was trading with a single digit handle, as it resided below both its 50 and 200 day SMAs.
Looking at individual sectors it was energy that led with the XLE higher by 2.1% (the top 3 actors were under performers as materials and healthcare rounded out the top 3). The ETF is lower by 14% from its most recent 52 week highs and has declined 5 of the last 9 weeks. It is making very little progress since marking the 25 MONTH double top which was just separated by 6 pennies the weeks ending 12/16/16 and 1/26/18, with intraweek highs of 78.45 and 78.39. That being said the bear flag is getting long in the tooth and if XOM, at 23% of the ETF, can catch any type of momentum, a big IF, than the XLE could spring ahead. The 800lb gorilla in the space has the look of a bullish falling wedge above 75 as it CLOSED just above it today, and it is making higher highs on RSI showing some positive divergence with PRICE. I would be more in tune to play leaders in the group instead of XOM, but its huge weighting could give leaders an extra boost. Lagging Tuesday were technology and utilities.
The retail space like most groups, especially now as markets frown and the leaders are separated from the laggards, is bifurcated. There have been some robust moves in the small cap names with LE coming to mind, higher by 40% the last 2 weeks alone. CTRN has jumped by the same firm amount but took 3 weeks to do so. BURL, LULU and even NKE has remained strong during the recent overall downturn. Below we look at M and how it was profiled in our Thursday 3/15 Game Plan, and it was a notable laggard between June ’15 and November of last year, but since then its chart complexion has turned around nicely. Accumulation has taken place with big up volume weeks ending 11/10, 12/1 and 3/2 advancing 8.8, 14.8 and 13.2% respectively. The round number theory has come into play with the 30 figure and a bull flag formation. It also expresses the importance of CLOSING prices as it was above the 30.25 trigger on Monday but reversed. Keep in mind 30 was resistance one year ago last April and May so a decisive move above could propel this stock up in a meaningful way. Today it did not join the party.