Markets displayed bearish action Tuesday as they started with mild gains and went out hard upon lows for the session. The Dow and Russell 2000 were the biggest losers each falling .7% and the Nasdaq and S&P 500 retreated a more blandish .2 and .3% respectively. The Dow recorded a bearish engulfing candle at the very round 25000 number today and the leading Nasdaq has now failed the CLOSE in the upper half of its daily range for 4 days in a row. Perhaps most concerning was the bearish engulfing candle the Russell 2000 registered Tuesday at all time highs. It is still 1% above its break through the 1610 bullish ascending triangle trigger, but something to monitor closely as the saying goes things always look the rosiest at the top. The VIX added just a bit more than 1% today which I thought would have been more, but to its credit it is not moving very far away from the 200 day SMA that it now sits just underneath.
Looking at individual sectors Tuesday there was some clear bifurcation as the financials have woken up a bit with the XLK leading today advancing .6%. The ETF had the look of a bull flag breakout today, with a measured move of two handles, but it can also be viewed as attempting to move through a bullish falling wedge which has a measured move almost 4 handles. A breakout from the latter (was above intraday but needs to CLOSE above 28.50) would put it above the round 30 number, a feat it has achieved on a CLOSING basis only 4 times this (three of which were by 3 pennies or less). Utilities and technology rounded out the top three as the XLU and added .4 and the XLK lost .16%. Lagging today were the industrials as defense plays were soft including NOC LMT and RTN all of which retreated more than 2%. Energy, the only group weaker than the industrials, was the second weakest group as the XLE recorded a bearish shooting star candle near the critical 78 number. Lets see if the chart can right itself by the end of the week as bulls do not want to see the ETF pausing to long in this area like it did it December 2016 and again this January.
Internet plays have been very strong, a welcome sight as software and semiconductors have both been contributing bullish subsectors within technology. Other internet names that have acted well include GRUB, AKAM, TWTR and GDDY. Below is the chart of ANGI and how it was presented in our Friday 5/11 Game Plan. The stock is up more than 6% this week already and it did break above a double bottom trigger of 14.45 on 5/11 and it did retreat slightly but found support at its 50 day SMA. Another way to look at the chart is that it did develop a handle on its double bottom base and today could be interpreted as a break above a 14.87 trigger too. The stock is lower 7 of the last 10 weeks, but now sits just 5% off most recent 52 week highs, which should be considered positive action given the 50% gain witnessed between the weeks ending 1/5-3/9.