Markets concluded the week in a quiet fashion with the Dow higher by .4, the S&P 500 and Russell 2000 by .2% and the Nasdaq finished the day fractionally lower. The Dow is on a 7 session winning streak and all four of the aforementioned indexes are now above their 50 day SMAs, and comfortably so. For the week they all scored solid gains and as always it was good to see the Nasdaq outshine with a gain of 2.7%, the Russell added 2.6, the S&P 500 2.4 and the Dow 2.3%. On a YTD basis all four are also now in positive territory with the Nasdaq leading higher by 7%, the Russell 2000 by 4.6%, the S&P 500 by 2% and the Dow marginally up by .45%. The transports via the IYT is sporting a bullish ascending triangle with a trigger of 196, which if taken out carries a measured move to 215. The IBB has held the very round par number this year the weeks ending 4/6 and 5/4 and is now more than 6% above that level. It was important as 100 was resistance in August-September ’16 and March ’17, until a huge 9.6% weekly gain the week ending 6/23/17 that was accompanied by the largest weekly volume in the last year and a half.
Looking at individual sectors, what came to the forefront for me was the performance of the financials. For the week the important group rallied 3.6%, its fourth best weekly gain in the last 17 months (the week ending 6/9/17 also rose 3.6%). The only weeks that outdid this one were gains of 5.2, 4.7 and 4.4% the weeks ending 12/1/17, 2/16 and 3/9. Friday halted a 5 session winning streak and did so at the top of a bullish falling wedge. Look for the ETF to regroup and attempt a breakout again perhaps next week. A break above 28.50 carries a measured move of 3 1/2 handles, more than 10% so not insignificant. The finnies were only outdone of course by energy on a weekly basis as the XLE powered higher by 3.9%, on weekly volume the third best in the 11 months. On the daily look Friday healthcare was a clear winner with the XLV advancing 1.5%, while the other 8 major S&P sectors were clumped together ranging in gains of .2 to losses of .1%.
We spoke about the financials a few times this week and most recently in the paragraph above. The group is acting well and with interest rates still historically low, but climbing they are as the 10 year is still hugging 3%. That “magic” number was CLOSED above on 4/25 and 5/9, but the very next session both times went right back beneath. Below is the chart of BLK and how it appeared in our Thursday 4/26 Game Plan. Now this emphasizes the importance of CLOSING prices and also why we admire round number theory. We spotted a bearish descending triangle pattern with a potential sell stop below the bottom horizontal that aligned with the very round 500 figure. It bounced off that number exactly on 2/9 and did so again on 5/3 but never penetrated the level or came close to CLOSING below it. Any investor who attempted to get cute and front run the trigger is now in the red by 40 handles. A lesson well learned.