Markets followed through nicely Thursday as the Dow led the way with a 1% gain. The Russell 2000 and S&P 500 rose by .7% and once again the Nasdaq “lagged” higher by .5%. For the week heading into Friday the Dow is showing strength higher by 1.7%, more than doubling the S&P 500’s gain of .8%. The wobbly Nasdaq has advanced .2% and it needs to be woken up, although it has produced its first three day winning streak in one month. All three of the previously mentioned benchmarks have the look of WEEKLY bullish hammer candles so far. The VIX did CLOSE below its 50 day SMA, and it is a start but it has done that in early March and stuck near the line only to recapture rapidly. Lets see how investors want to go into the weekend as Monday for instance the Nasdaq has witnessed big moves the last three. On 4/2 it slumped 2.7%, on 3/26 it jumped 3.3% and on 3/19 it fell 1.8%. One has to give the market credit as bulls seem empowered as they have been buying dips this week.
Looking at individual groups Thursday it was a risk on feeling with materials and energy leading the way as the XLB added 1.9 and the XLE rose 1.8%. The XLE is trading pretty taut between the 65-70 level for the last 2 months, and it has the feeling of a beach ball being held underwater. A push above 70 could be very powerful and today the ETF pushed against the 69 number once again, and today it was resistance at its lower sloping 50 day SMA. Technology once again took a back seat and one has to wonder now if its recent hibernation, was more than a healthy pause and maybe it has a significant injury. The XLK with all its volatility this week is higher by .4% for the week and bulls really need this category to step up to the plate. The .4% weekly return with one day left is the worst off the major S&P sectors. Healthcare lagged as the XLV dropped .1% Thursday.
Energy has been discussed here and being open to buying names that are showing strength, despite the XLE’s weakness. If one looks underneath the surface there have been some nice charts. Keep in mind there was also been M&A activity with RSPP and CXO. Below is the chart of EGN and how it appeared in our Wednesday 4/4 Game Plan. Not surprisingly the round number theory came into play as it reverses at 60 on 1/9 and gravitated the next month to touch the very round 50 number before resuming its uptrend. The stock is defending the 60 figure now with 6 straight daily CLOSES above, and on a weekly basis it recorded just three weekly CLOSES above since the week ending 7/17/15, even though 16 weeks since then traded above 60 intraweek.