Markets began Tuesday soft and continued to bleed throughout the day. The Dow, Nasdaq and S&P 500 all lost near the .7-.8% range, and the Russell 2000 was resilient finishing UNCH. Concerning on the Russell was todays spinning top candle after Monday’s bearish engulfing candle at all time highs, which could signal some upcoming fatigue after a 90 handle run since May 1. The indexes have had a strong run and its premature to start turning bearish, but recent candles on the Nasdaq call for some caution. Mondays bearish shooting star was preceded by Fridays spinning top after a 450 point move following a bullish hammer off the round 7000 number on 5/3. A big tell for technology overall will be to see how AAPL defends its 179.04 double bottom trigger that was taken out on 5/4, if it retests it at all. The VIX followed through impressively, surging more than 14%, after yesterdays bullish harami cross and recaptured its 200 day SMA in the process. Volatility is not going away, especially after todays break above a bull flag on the $TNX at above 3 which carries a measured move to 3.25%.
Looking at individual groups it was easy to see it was a heavy day as all 9 of the major S&P sectors fell. Energy was the “best” performer as the XLE fell by three pennies, as it hesitates near the 78 level where it has twice in the last year and a half, and it also ended a 7 session winning streak. More importantly lagging were technology and healthcare as the XLK and XLV slumped by .9 and 1.3% respectively. The XLV just can not seem to gain much traction above its 50 day SMA recently. It CLOSED above that line marginally on 2/16, again 2/26-27, then between 3/9-14, and then a couple one or day day spurts above before falling back underneath, obviously a bearish sign. The descending triangle that aligns with the round 80 number still exists and a break below carries a measured move lower of a dozen handles.
On weak sessions like Tuesday I always like to see which names withstood the selling best. Below is the chart of FAST and how it appeared in our Tuesday 4/24 Game Plan. It has been pushed lower partly for its inclusion in the weak industrial space. But we are big proponents of round number theory and the very round 50 figure came into play here. On its weekly chart, the four weeks ending between 4/13-5/4 all traded below 50 on an intraweek basis, but all four CLOSED above the number and its 200 day SMA was close to 50 too. The 40 number came into play as it commenced a big takeoff there as the stock gained 19 of 23 weeks ending between 8/25/17-1/26. FAST was up 1.4% today and now one can add to or initiate a position with a buy stop above the 50 day SMA at 53 and then through a cup base trigger of 58.84.