Markets displayed bifurcated action Thursday as the Dow was marginally positive to the tune of .4%, The S&P 500 down .1%, and most concerning was the lack of leadership the Nasdaq or Russell 2000 demonstrated. The Nasdaq fell .7% and the Russell 2000 lost .5%. We will stress leadership is allowed to take days off but one certainly wants to see these two benchmarks regain their foothold on the leaderboard. The Nasdaq did register a bearish engulfing candle today reversing at the round 7700 number and finding a pedestrian bounce at the 7600 figure. It looks eerily similar to the 3/13 engulfing candle which led to swift selling. Volume was a bit elevated as trade today was the fourth largest in the last 2 months. One positive in todays session was the lack of VIX vigor. It was up better than 4% but was pushed back near its 200 day SMA and looks like a potential bearish MACD crossover is on tap.
Looking at individual sectors Thursday it was energy that for the lack of a better word woke up energized. The XLE was easily the best performer today with the XLE higher by 1.5%, more than doubling its second nearest space the utilities. The XLU put in a decent session gaining .7%, but one has to keep this group in the penalty box until it can show any resemblance of strength (it did record a bullish inverted hammer candle putting a 4 day losing streak to rest). The third best actor Thursday were the staples with the XLP rising .4% giving the day a “risk off” feel. Lagging were materials and technology which had been robust the last 2 days as the XLB and XLK fell .5 and .8%. Heading into Friday all of the major S&P sectors are in the green, except for the utilities that are still down a large 3% this week so far.
My readers know I am a big fan of candlesticks, but as always PRICE action supersedes all else. If PRICE and the candles align the idea will have more conviction. When you couple that further with a name that has lagged when peers in the group are flourishing that makes it all the better. Below is the chart of CHRW and how it was presented in our Thursday 5/24 Game Plan. First of all the stock is underperforming as it now trades 12% below most recent 52 week highs, whereas rivals ODFL and JBHT trade just 2% off theirs. That should raise ones antennae. Marry that with a double top near the very round par number this January and April, with bearish candlesticks on each of those sessions and a decent risk/reward short situation arises. CHRW also filled in a gap with resistance at the 50 day SMA. This set up is still in play, and with all the bearish connotations I must say maybe it is to good of a short, but as always let PRICE dictate your actions and keep your losses small.