Markets acted poorly Wednesday as the Dow and S&P 500 fell .7%, the Nasdaq dropped .4% and the Russell 2000 stood out, in a good way, advancing .3%. It was distressing that the Nasdaq could not act better, given the 800lb gorilla AAPL having a stellar session and it rapidly approaching the double bottom trigger of 179.04. It rose 4.4% after a well received earnings report and is nearing the round 180 number which has given the stock fits dating back to 1/18 (3/12 was the only CLOSE above the figure and the next day registered a bearish engulfing candle at all time highs). FB also added 1.3% so to see the tech rich index CLOSE hard upon its lows was concerning. Outside of tech we did mention the weakness shown in some best of breed names Tuesday in MTCH and STX, and today one could include EL. It registered one of its worst days in sometime cratering almost 9%. The hangover for TAP is one for the record books as the name sits 38% off most recent 52 week highs, and has been chopped nearly in half since the week ending 10/21/16. Since then it has declined 48 of 80 weeks and this week has lost fizz to the tune of nearly 16% heading into Thursday, pun intended. The VIX was not partying at all today suggesting perhaps the downside from here could be somewhat limited.
Looking at individual sectors Wednesday it was energy, utilities (sounding right a broken record there) and technology that “led”. The XLE rose by .4%, after being higher by more than 1% intraday, and has been relentless since a double bottom nearly 2 months apart just below 65 on 2/9 and 4/2. Today completed its handle on a cup base with a potential trigger of 74.77. The ETF is looking at a fourth straight weekly gain, lower by .2% so far with two days left. The XLK was unable to produce solid follow through after Tuesday bullish engulfing candle as it was stopped at its 50 day SMA, which it has been underneath now for all of just three days since undercutting the line on 3/22. It is not surprising that it was stopped at that line, but lets give it to the end of the week as a second attempt may prove successful. Lagging today were the staples which again proves that things in motion are more likely to persist than reverse. The XLP slipped another 2%, and this week is off 3.4% and is looking for a SEVENTH 2% or more weekly decline in the last three months alone. So much for safety.
The industrials have been soft witnessed most recently with last weeks drubbing by the XLI lower by more than 3% and this week heading into Thursday is off another 2.6%. The ETF is now below its 200 day SMA but one can be mildly positive with the hammer candle on 5/1 and inverted hammer today. Below is the chart of a leading industrial name, TXT and how it appeared in our Monday 4/23 Game Plan. Keep in mind names that outperform their groups are most apt to lead right out of the gate, when and if the group can catch steam again. This is a name to watch, and to be fair this name was stopped out as the stop was too tight, but it does not mean one should take it completely off their radar. Of course technical analysts are human and get things wrong plenty, but it is now filling in a gap from the 4/17 session and successfully retested the recent symmetrical triangle breakout and acted relatively well Wednesday.