Markets were lower across the board, but not meaningfully so and a lukewarm late session rally keep the damage at bay. It does feels like path to least resistance is lower however, as the Nasdaq finished its second straight day underneath its 50 day SMA and its third down day in a row. The doji candle we spoke of from last Wednesday is looming large. The tech heavy benchmark fell .25% and the Russell 2000, S&P 500 and Dow all ended up near UNCH. The S&P 500 is retreating back into its symmetrical triangle and we would get bullish with a move above the 2725 level and until then the index sits in no mans land. The Russell 2000 is the only of the four major averages above its 50 day SMA and it is also within a symmetrical triangle, and a move through the round 1600 number could be powerful. The VIX missed a four day winning streak, but did record a late day push as it was down more than 5% around lunchtime. That 15 area remains very critical as it was where a long term cup base broke out from and now serves as the bottom line of a bearish descending triangle.
Looking at individual groups Monday, the word of the day was bifurcation and it has been recently. Weakness was in technology as it was the worst acting sector of the major S&P sectors as the XLK fell .4%. Today was its fourth consecutive decline and for now it looks as if another higher high is not in the cards as it did not come close to the bearish engulfing candle registered on 3/13 (keep in mind that the session before was a doji candle which gives greater significance to the pattern). The ETF is now below its 50 day SMA and is carving out the right clavicle in an unorthodox bearish head and shoulders formation, but that is premature and things could change as this week is hot and heavy with a bevy of tech earnings. Not surprisingly energy was at the top of the leaderboard as the XLE rose by .6%, followed by the healthcare sector with the XLV adding .4%. Energy remember is looking for a THIRD straight week of being the best performing S&P sector.
Technology has been a steady outperformer overall looking back recently, and if one can identify a stock that did not keep pace, it could be ripe for a short sale. Many “old tech” names have been acting well, but below is the chart of NCR, and how it was profiled in our Tuesday 4/17 Game Plan. Its trigger, which aligns with the round 30 figure, has not been hit yet but this name has been in a strong downtrend for over a year now. The stock currently sits 31% off most recent 52 week highs, and the 30 number is important as it has been tested on the downside THREE times since last November. It recorded one CLOSE below 30 on 11/15/17, the middle session of a bullish morning star pattern, but a finish under 30 again could prove troublesome. The longer the base makes breakouts or breakdowns more success prone and this name has a potential measured move of 20 handles lower. Keep this stock on your watchlist.