Markets recorded their fourth consecutive volatile Monday with the Nasdaq higher by .5%, after being up more than 2% intraday. It did finish well off session highs as it reversed near the 7100 number which it did on 3/29 and 4/5 too and the following days lost 2.7 and 2.3% respectively. Before we get too bearish it has advanced 4 of the last 5 days. The 200 day SMAs of all of the top four indexes I follow, the Dow, S&P 500, Nasdaq and Russell 2000 are in close proximity and it will be interesting to see how they react if they are to come into contact with them again. The conventional wisdom states the more time a line is touched the stronger it becomes. I feel the opposite of that as the more times a line is touched the more likely to break. Surely there will be plenty of stops there as well, and it should make for some more chaotic action. Since the VIX CLOSED above the very round 20 number on 3/22, a figure that has become a line in the sand, it has registered just one finish underneath on 4/5. It happens to align with the upward sloping 50 day SMA too. The technicals as always are playing a role. Stay tuned.
Looking at individual groups it was just what bulls wanted to see with technology and financials leading the way before a late day selloff. It has been awhile since we have seen that formidable one-two punch, which has more often than not been from the utility or energy sectors. It ended up being healthcare that led after some M&A activity and the XLV rose by 1%. Industrials, cyclicals and staples lagged Monday with those three being the only losers among the major S&P sectors. Energy is still a big space to monitor as Monday was the third consecutive session that its downward sloping 50 day was tested and for now the bears are still in control. A break above that line would give the potential cup base under construction a nice look (today it recorded a rare doji candle only its second in the last 6 months).
Retail has been a standout for months now, after nearly every name was subject to the whims of AMZN, funny how we do not hear much of that anymore, perhaps because it is broadening its scope with the recent healthcare news for example. Again I track PRICE only so the reasons why are irrelevant. To be clear the chart of CRI, and how it was presented in our Friday 4/6 Game Plan, has not led but this former best of breed name deserves to be given a second chance. It certainly has seen its share of weakness still down 19% from most recent 52 week highs, but it did show some interesting aspects recently to give it a good risk/reward scenario. It did bounce almost precisely off the very round par number, touching 100.05 on 4/2, which also successfully retested a former short cup base breakout last November giving a “cluster of evidence” as we technicians say. That gives the entry a bit more stability. Of course nothing is fail proof, but this is a stock to watch over the coming months.