Markets put in a lackluster session Tuesday as the Russell 2000 was a clear winner higher by .5%, and this index is often seen as a leading indicator and demonstrates investors risk tolerance. So it is good to see it acting well. It is now pushing on the top line of a symmetrical triangle and the three prior touches of the line turned out to be bearish with engulfing candles on 1/24 and 3/13 and a shooting star on 4/18. The Dow, Nasdaq and S&P 500 ended up in the UNCH neighborhood, and the Dow and S&P 500 were stopped at their downward sloping 50 day SMAs. The Nasdaq which has now CLOSED above its 50 day SMA for a second consecutive day, but needs to remain above this line. The tech heavy index did finish north of that line for three days between 4/17-19 before slipping back underneath. It is still early but it is encouraging to see the Nasdaq CLOSE in the upper half of its daily range for the last 4 days. Interesting today was the bullish hammer candle registered by the corporate bond ETF LQD which could signal a potential end to the weakness as it is currently on a 5 week losing streak. It created a short double bottom with the 5/1 session, but a move below todays low would be interpreted as a bear flag breakdown.
Looking at individual sectors there was clear bifurcation Tuesday as energy, industrials and financials all rose between .7-.8%. The only other group to gain ground was technology with the XLK higher by .2%. Energy was a hot topic today with the Iran announcement this afternoon, and the XLE reversed higher rising .8% on the best daily volume in more than 3 months (it did so as crude lost nearly 2.5% as well). The ETF is looking for a FIFTH consecutive weekly advance, a feat it has not accomplished since a 6 week winning streak the weeks ending between 8/25-9/29/17. More importantly it is approaching the 78.50 level that would be a breakout above a bullish ascending triangle that began the week ending 12/16/16. Clear laggards came from the healthcare and utilities with the XLV off by .8% and the XLU by 2.5%. The XLU never made much progress after a break above a bullish inverse head and shoulders trigger of 51 and it is important to note the 200 day SMA is sloping lower.
One of the bright spots we have been witnessing is the nascent technology leadership. It is a welcome sign with some of the big cap tech names acting well including AAPL. I am still a bit skeptical even though it jumped higher by more than 13% last week on big volume and it is hard to ignore the PRICE action however and it currently trades above a double bottom trigger of 179.04. When the earnings announcement was made, it seemed most attributed the gains to buybacks and dividend increases, and then received another lift with the Buffett announcement. But like I said just focus on PRICE and below is the chart of SQ and how it appeared in our Monday 5/7 Game Plan. It broke above the very round 50 figure that same day and today ended with a CLOSE above an add on double bottom trigger of 52.60.