Markets slipped Thursday and most concerning was the action in the small caps as the Russell 2000 which has been holding up well fell .9%. The action is not what bulls wanted to see one day after a good looking bull flag breakout. Today recorded a bearish piercing line candle and we know the best breakouts work out right away. A bright spot was the Nasdaq which dropped less than .3%. It did however register a bearish shooting star just below the round 7500 number, which presented problems in the past. First in late January, and then it spent some time above that, perhaps a bull trap, for 3 sessions between 3/9-13. That 7500 level serves as a bull flag and it did at one point have the look of a cup with handle but it started trading sideways. The Dow fell 1% Thursday and has now lost ground 5 of the last 7 sessions after encountering problems at the round 25000 figure with an ugly bearish engulfing candle on 5/22. On a weekly basis the Nasdaq is showing some fortitude UP a scant .1%, as the Dow and S&P 500 are lower by 1.4 and .6% respectively.
Looking at individual sectors Thursday it was an unlikely couple that led with the utilities and technology dancing to the top of leaderboard. The XLU rose by .2% and the XLK was UNCH on the day and the utilities are popping up more and more at the top of the sector rankings. If one thought energy was a suspect leadership group, then what do they think about the utilities? Technology needs to get going and in rapid fashion. Lagging were the industrials and staples as the XLI and XLP lost 1.5 and 1.6% respectively. The cyclicals were the third best actor as the XLY fell just .5% buoyed by automobiles and some decent earnings reports by retail names. GM drove higher by nearly 13% Thursday and looks poised to easily achieve a four week winning streak tomorrow which would be its first in nearly 8 months.
The financials continue to see a confusing space overall as the traditional banks are acting softer than bulls want to see. Looking a little deeper into the group some of the exchanges are working well. NDAQ now sits just 3% off its most recent 52 week highs, but CBOE is down 8 of the last 11 weeks and off by an astounding 30% from recent 52 week highs, and it trades down this week by 5.4% heading into Friday. Below is the chart of CME and how it was presented in our Tuesday 5/14 Game Plan, which sits 5% off its own most recent 52 week highs. The stock is higher by more than 3% this week, showing strength after the previous 4 weeks all CLOSED very taut within just .62 of each other. It has broken above its 50 day SMA Wednesday gaining more than 4% on robust volume and now look to add to or initiate a position through the double bottom trigger of 166.75.