Markets traded in a volatile fashion ending the session near the UNCH mark. The Dow which rose fractionally is still making lower highs since January, as it has done 4 times, and still looks like its being magnetically pulled toward a bearish descending triangle trigger near 23300. It is still roughly 3% away from there, but if the downtrend resumes with momentum a break below the pattern does carry a measured move lower of 3300 handles. Lagging Wednesday was the Nasdaq and Russell 2000 which slipped .05 and .2%, and those are the two indexes bulls want to see do well. On a YTD basis they are still outperforming the S&P 500 and Dow, but the margin is narrowing. The Russell 2000 recorded its first 5 day losing streak of 2018, and interesting was the VIX which for a second straight session it was above its 50 day SMA but failed to CLOSE north of it. The very round 20 number rejected it today as well as it did on Wednesday. The 10 year did manage to CLOSE above 3% and it failed to spook the markets with any real force.
Looking at individual sectors on Wednesday, there was a risk on feeling with energy and materials leading the way as the XLE and XLB rose by .8 and .6% respectively. The two ETFs have taken different paths recently as the XLE is off 6% from its most recent 52 week highs and the XLB is 10% off its own. Additionally the XLB slumped 2.7% on Tuesday, so todays move has to be taken in that context, although volume was decent, but the chart is in no way to be interpreted as bullish. The XLE looks like its readying to make another attempt at breaking above a cup with handle trigger of 74.32, which it did intraday on 4/24 but did not CLOSE above. Lagging today were technology, financials and the utilities (which were the best performer easily on Wednesday). Technology continues to be an issue even with some decent semiconductor earnings today, most notably TXN up almost 5%, and CREE faded after a nice start however. The tech culprit today was software with stocks like CHKP and TEAM lower by 6.4 and 3.6%. The malaise is spreading to subsectors within the overall technology space.
One would have to have been hidden under a rock to be unaware of what energy has been doing lately. It is looking for a third straight weekly gain and the XLE has advanced 8.6% over the last 2 weeks alone. We have spoken about the long bullish ascending triangle the ETF is sporting that began the week ending 12/16/16 with highs that week of 78.45 and a second top the week ending 1/26/18 with intraweek highs of 78.39. It still has some work to do to get above there, but it is worth keeping an eye on. Below is the chart of a former leader that has regained that status, PXD and how it was presented in our Monday 4/23 Game Plan. To be fair the 192 trigger was not hit, it came close, but one now has to be aware of how the very round 200 number aligns with a cup base pattern. The week ending 2/17/17 was stopped almost precisely there and look to enter with a buy stop above a 199.93 pivot.