Markets were a bit bifurcated Tuesday with the Nasdaq putting up a decent gain of .9% as AAPL and AMZN were higher. The latter name is attempting to find energy after failing to CLOSE above a cup base trigger of 1616.64 on 4/27 after reporting earnings (it is also dealing with round number theory as it has traded intraday above the 1600 figure four times since 3/13, but could not finish above once). AAPL as we mentioned yesterday was able to climb back above its 200 day SMA, which is sloping higher. It is not a crime to gently move beneath that secular line, but if it takes to long to recoup it, or trades well below it or the line is downward sloping that is much more problematic. One overall negative was some disappointing action among some leaders, which is a bearish sign. A couple of examples were STX and MTCH, and these names never undercut their 50 day SMAs during the recent market malaise. As many talk about the relative low percentage of stocks that are still above their 200 day SMAs overall, the action in those two is something that should worry market participants. Behaving firm with the Nasdaq was the Russell 2000 which registered a bullish hammer, and CLOSED fractionally above its 50 day SMA. The VIX again proved not to put up much effort to the upside, and looks to be carving out a bear flag pattern, with a drop below 15 giving a measured move back to single digits. Now that is far from a consensus belief these days.

Looking at individual sectors Tuesday technology was the clear winner. In fact it was the only one of three major S&P groups to rise, with the XLK advancing 1.25% on the back of the big caps. GOOGL for one, that I think still looks bearish big picture, did record a bullish engulfing candle today and CLOSED just above its 200 day SMA. LRCX also registered an engulfing candle right at its 200 day SMA as well, and both of the aforementioned names are making a stand right where they should be. Keep in mind LRCX is still 19% off its most recent 52 week highs and GOOGL is 13% off its own. Semiconductors and computer hardware contributed to techs outperformance today. One caveat was the biggest percentage gainers came from weaklings, particularly the semis, with stocks like NPTN, XPER, MTSI or IPHI surging. Lagging today were the staples and energy as the XLE and XLP fell .6 and .9% respectively.

Some safe plays lose their status over time. For me I never understood trying to hide out in plays that looked “valuable”. If one wants to hedge many times cash is a very good option. Below is the chart of PPC and how it appeared in our Wednesday 4/25 Game Plan. The stock now sits 44% off most recent 52 week highs and it has slumped falling 18 of the last 21 weeks. Amazingly immediately preceding that it romped higher 18 of 21 weeks ending 7/14-12/1/17, nearly doubling in the process beginning near the very round 20 number. This demonstrates the benefits of technical analysis, as a chart could look fantastic, but one needs to learn to cut losses quickly. Many were explaining that this name should reap gains as the worlds population would need an abundance of cheap protein which chickens could fill. And that is true, but respect the PRICE action and one would have avoided painful losses. It just broke below a bearish descending triangle, and the bears are feasting on the chicken wings at the moment.

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