Markets for the most part finished in a lackluster fashion Friday heading into the long holiday weekend. The Nasdaq was the only of the big four indexes to gain and it did so tepidly, and it did shy away after coming within just 5 handles of a bull flag breakout. The Dow and S&P 500 lost .2% and the Russell 2000 fell .1%, and the latter has CLOSED the last 3 sessions extremely taut all within less than 2 handles. Falling rates on the 10 year with the TNX dropping 4 of the last 5 days since the bearish evening star pattern was completed on 5/18 failed to ignite stocks. Of course to begin with stocks tend to do well as rates are rising as it is a sign the economy is growing. Keep in mind that the TNX is touching its rising 50 day SMA for the initial time following its recent double bottom breakout, often an ideal entry point for a long. On a weekly basis it was good to see the Nasdaq lead with a 1.1% advance followed by the S&P 500 up .3%, the Dow .1% and the Russell 2000 was UNCH. On a YTD basis not much has changed as the Nasdaq still maintains a comfortable lead with a 7.7% jump so far. The Russell 2000 is in close pursuit up 5.9%, the S&P 500 by 1.8% and the Dow by a scant .1%.
Looking at individual groups Friday it was utilities that led once again and that is becoming a little bit to familiar. The XLU rose .4% and today it was the staples that were runners up as the XLP gained .2%, not the kind of one-two punch bulls would have liked to seen. Cyclicals via the XLY rose .15%, the only other major S&P sector to gain ground. Lagging badly yet again was energy as the XLE plummeted 2.6% as crude was hammered. I never speculate on what may have caused a move, but this could very well have been technically driven as the XLE had run into the 78 level that we have talked about for a few weeks now and failed as it it did in late ’16 and early this year. On a weekly basis it was the same scenario as it was Friday with the XLU jumping 3.1% and scored its third 3% plus weekly gain since the week ending 2/16. To see how rare they are one would have to go back a year to see another move higher of that magnitude with a 4.1% gain the week ending 2/24/17. On the downside it was the XLE that was easily the biggest laggard lower by 4.5% for the week. It abruptly stopped a 6 week winning streak recording an ugly bearish engulfing candle in the process.
Software names have been anything but for awhile, and if tech can continue to lead the overall group will obviously benefit. One of the subsectors within software that have been resolute have been cyber security, with the exception of SYMC which is now lower by 38% off its most recent 52 week highs. Peers which have been contributing to the solid performance include FTNT and CYBR. Below is the chart of PANW and how it was presented in our Monday 4/9 Game Plan. The saying goes the longer the base the bigger the space (upon the breakout) and this stock cleared a 200.65 cup base trigger in a base nearly 3 years long. This week recorded its third weekly CLOSE above the very round 200 number, and if one “looks left” on the base they would see when the base began the stock was coming off an incredible run after bouncing off the round 40 number in November of ’13. That is a pretty secure move, pun intended.