Markets began the week on a positive note with the most of the major averages advancing between .7-.9%. There have been some positive development as last week (one does have to come away impressed that the markets did not fade the nice morning futures bump) the Nasdaq put up the best return of the big three, where the two before that the more defensive Dow was the best performer. For 2018, obviously a small sample size the Nasdaq is making higher highs and trading within a channel. The S&P 500 has carved out a symmetrical triangle which can break either way and the Dow is sporting a bearish descending triangle with the almost precise double bottom of 23360 and 23344 recorded on 2/9 and 4/2. Of course anything could happen and if it breaks ABOVE the bearish triangle in the opposite of what would traditionally do the move could be powerful to the upside. The bulls do seem to be making an impressive stand here and there was a lot of talk about the indexes breaking below there 200 day SMAs, and that chatter has become silent as all of the aforementioned benchmarks in this paragraph are all now battling with downward sloping 50 day SMAs. The Russell 2000 has now CLOSED 4 straight days above its 50 day SMA and the VIX seems to be floundering here, but is near a 40 RSI where it has bounced on several occasions in the last 6 months.
Looking at individual groups it was a very broad rally with all of the nine major S&P sectors advancing. The glass half empty look saw leadership come from suspect sectors. Monday saw the utilities lead with the materials as the XLU and XLB were higher by 1.35%. In fact if we look at the previous three weeks we have seen energy being the best actor on a weekly basis the prior 2 weeks and the utilities 3 weeks ago. Monday witnessed technology and financials hovering near the bottom of the pack, although the XLK and XLF did gain .8 and .4%. Energy is still impressing and can it have turned the corner? The XLE rose by 1% today and the prior double top that was put in place with intraweek highs of 78.45 and 78.39 the weeks ending 12/16/16 and 1/26/18 could now be morphing into a nearly 1 1/2 year long bullish ascending triangle. Of course it still has some work to do to climb toward 78 but we look longer term and it has made higher weekly lows within the formation. If a breakout should occur sometime in 2018 it would have a measured move to 95.
Technology overall is beginning to make a long overdue stand here, and some names have not received the memo. All tech stocks are not created equal and as many names still linger quite a way from their most recent 52 week highs, some are thriving. Below we take a peek of a name that is NOT acting better, and that is often a negative tell going forward. Think of it as a wounded animal that gets separated from the pack on the National Geographic channel, while a hyena narrows in on a weak wildebeest or other prey that can not keep up. Today we look at the chart of ELLI and how it was presented in our Wednesday 4/4 Game Plan. Even with todays reversal it still trades 24% off most recent 52 week highs and is still well below the very round 90 figure which aligned with a break underneath a symmetrical triangle pattern. Both of its 50 and 200 day SMAs are sloping lower and it still swims below both of those lines. If it gets back to a retest of that 90 number lay some out. The wide, loose and sloppy trade are all hallmark bearish characteristics.