Markets registered a second straight meaningful decline Friday, after a promising first three days to start the week. The Nasdaq was hit the hardest to the tune of 1.3%, the Dow and S&P 500 fell .8% and the Russell 2000 by .6%. AAPL was a big contributor to the Nasdaq’s softness this week, especially the Thursday-Friday which saw the stock slump nearly 7% alone. Volume Friday was huge, the heaviest in 8 weeks, and if there is a silver lining it did find support at its upward sloping 200 day SMA and trade had not been that robust since the February correction. Keep in mind that AAPL is the largest component in the Nasdaq making up more than 6% of the index, so if it sneezes the market has a propensity to catch a cold. On a weekly basis the Russell 2000 was best with a .9% gain, the Nasdaq added .6% and the S&P 500 and Dow .5 and .4% respectively. For those watching the YTD figures the Nasdaq has advanced 3.5% and the Russell 2000 by 1.9%, and both the Dow and S&P 500 have slipped 1 and .1%. Next week is a huge one for earnings and could have a big say in at least the short term direction of this market. The Nasdaq will certainly be helped if names like GOOGL, WYNN, ENAY, PYPL, AMZN, MSFT, SBUX and TWTR cooperate.
Looking at individual groups Friday it was the financials which were the only major S&P sector to advance and it did so by just ONE penny, not the most inspiring gain at all. Lagging were cyclicals, technology and staples which all retreated more than 1% with the XLY, XLK and the XLP off by 1, 1.4 and 1.7%. There was a small bit of bifurcation on a weekly basis with just two sectors showing a loss, that being technology with the XLK down fractionally by .2% and the eye sore of the staples screeching lower by 4%. The ETF is now 14% off most recent 52 week highs and is now spooning the very round 50 number which needs to hold, as that was support for the 4 weeks ending between 11/11-12/2/16. For a second straight week it was the energy space that was the best actor as the XLE rose by 2.6%, slightly besting the industrials with the XLI higher by 2.2%. The XLE could be carving out a handle on its cup base as it is now 3 days old, and it needs to be 5 days in duration to be considered legitimate.
At ChartSmarter I am a big proponent of buying strength. On the flip side of that one should sell weakness. Below is the chart of a former best in breed technology play OLED, and how it was presented in our Tuesday 4/17 Game Plan. The stock is off 55% from most recent 52 week highs, without a 2:1 split. It is now lower 10 of the last 13 weeks (2 of the 3 up weeks CLOSED in the lower half of the weekly range too), after encountering trouble at the very round 200 number with a bearish engulfing candle at all time highs there on 1/19. Its chart demonstrates why one should not fall in love with even the best of leaders. The name quadrupled in just 13 months since the beginning of November ’16 to this January. If this chart was flipped upside down it would look extremely bullish, but this is a name that should not be on anyones long radar until the chart can work off the heavy damage which could take many months or longer.