Markets put in a second straight productive session Tuesday, and once again the bears were unable to make any headway as the averages starting the day with strong gains. Hallmark bullish action is beginning hard upon the lows and going out on highs, preferably in strong volume. The next best thing and maybe even equal to that is what happened the last 2 days. The Nasdaq outperformed handily with a 1.7% gain, followed by the Dow, S&P 500 and Russell 2000 all gaining between .9-1.1%. The Nasdaq recaptured its 50 day SMA which is beginning to slope upward ever so slightly today, and that followed Mondays bullish harami cross. From a volume perspective on the WEEKLY chart it still looks neutral at best, as the 6 largest volume weeks since the week ending 2/2 have ALL fell (five of those 6 weeks CLOSED in the lower half of the weekly range). The Dow and S&P 500 also recouped their 50 day SMAs, and bears have to contend with the fact that none of the previously mentioned indexes are near overbought on an RSI perspective. In fact they are all between 50-60.
Looking at individual groups, the old saying goes better late than never, and thats how bulls should be feeling about this resurgent technology group. It had been hibernating, I thought it was taking too long, and frankly thats why opinions matter little and one should let PRICE alone dictate their decisions. The XLK jumped 1.9% and taking the runner prize was the consumer discretionary space as the XLY advanced 1.8%, as the XRT is looking for a fourth consecutive weekly advance. It was a broad rally for a second straight day this week with all of the major S&P sectors finishing in the green, except the finnies which ended with a fractional CLOSE. Lagging were those financials as names that have been reporting earnings are having negative reactions. Tuesday that was brought courtesy of GS, which has now declined the last SIX times it has reported numbers. The XLU is becoming comfortable above the very round 50 number and has the look of an unorthodox bullish inverse head and shoulders pattern we discussed last week.
Healthcare like any other sector is very diverse and has plenty of subsectors. There are biotech, pharma and insurance spaces to name a few, but today we take a look at a device play. Although the group is not as sexy as the biotechs, the area has been performing handsomely. Taking a look at the IHI, the ETF is lower by just 2% from its recent 52 week highs, while the XLV and IBB are 9 and 10% off their own highs. The IHI contains many best of breed names like ABMD which is doing battle with the very round 300 number and having some issues CLOSING above it until today, and below we peek into the third largest component in the fund, TMO. The chart here is how it was presented in our Thursday 4/12 Game Plan and it has since inched above a nice symmetrical triangle formation, which if it hits its measured move still has some way to travel. This chart is technically sound after a recent break above a double bottom base, and a subsequent successful retest and bounced off the very round 200 number nicely on 4/2 (it is looking to record its 15th consecutive weekly CLOSE above 200 which it should have no problem doing).