Markets displayed classic bear market behavior Tuesday starting out with lukewarm highs, and going out hard near lows for the session. The Dow was hit the hardest as a couple of its larger priced components in the price weighted index lost more than 6%. CAT was the more volatile name as premarket it was up nicely after an earnings release an reversed 15 handles from intraday highs on the largest daily volume in over one year. MMM now resides in bear market mode now lower by 23% from most recent 52 week highs. The Nasdaq dropped 1.7%, the S&P 500 1.3% and the Russell 2000 “outperformed” declining .6%. The 15 number we have been calling the line in the sand on the VIX held nearly perfectly today and was turned back near the very round 20 number and its declining 50 day SMA today. Still it rose better than 10%. They say things look rosiest at the top and CAT raised in full year outlook this morning, and we did hear that UTX had its best first quarter in more than 7 years, PCAR declared truck industry orders were more than double that from just last year. In my opinion we need to watch AAPL as it is more than 6% of the Nasdaq. That will have a big impact and the fact that its chart trades wide and loose is not a positive. And the S&P 500 is coming into contact one to many times with its 200 day SMA this year. The more that line is touched the less like it is to hold. We said earnings this week would have a big impact on overall markets going into the near term and so far it is not pretty.
Looking at individual groups Tuesday there was just one major S&P sector that CLOSED in the green, and it is almost obvious which one would on a gloomy session today, the utilities. The XLU rose .7% and look for some follow through on the ETF back above 51 which was the neckline in a bullish inverse head and shoulders pattern. The jury is still out but time is of the essence as 4/18 may turn out to be a bull trap. Lagging today were the materials and industrials as the XLB and XLI slumped 2.6 and 2.8% respectively. Materials were hit by stocks like FCX which screamed lower by more than 14%, and it has carved out a decent looking cup base pattern with a potential trigger of 20.35 and anyone who attempted to front run the idea today is a disciple of PRICE action. Others in the space that have worrisome charts are MAS, once a best of breed name, which is now off by 22% from its most recent 52 week highs. It is now lower 9 of the last 13 weeks and by almost 8% this week just 2 days in.
We have been discussing how technology overall has been putting a big damper on the overall markets. It has led a bit recently, but today the big cap Nasdaq 100 slipped 2.1%. Sure the tech heavy index will be heavily affected by AAPL’s as it trades 11% off most recent 52 week highs. A very large component of tech, an often a leading indicator are the semiconductors. The SOX CLOSED right at 200 day SMA support Tuesday, but feel tenuous. Below is the chart of AMD and how it was profiled in our Tuesday 3/13 Game Plan. This name is a clear laggard in the space as it now trades 36%, not a typo, off its own most recent 52 week highs. Additionally coming into play is the very round 10 number, which until recently has been good weekly CLOSING support since breaking above the figure the week ending 1/27/17. Only one other week finished below 10, ending 12/8/17, until the last 3 have CLOSED below that number. The symmetrical triangle featured on the chart below has a measured move to 8.50 and we stick by that going forward.