Markets showed nice resiliency Monday as bears must have once again been excited to start the new week off on the wrong foot. Early on futures gave them credible, yet temporary belief but the major averages, especially the two that define the “risk on” appetite of investors, the Nasdaq and Russell 2000, outperformed. In June so far for example, the Nasdaq has CLOSED at the top or in the upper half of its daily range 10 of the last 12 sessions. Of course it is a small sample size, but to be doing it at all time highs, when the news seems to be melancholy day after day has to be considered impressive. Today it finished up 1% off intraday lows. The Russell 2000 was even better received as the small cap benchmark ROSE .5%, ending well above last Fridays doji candle, which can indicate potential fatigue in the prevailing move. The S&P 500 lost .2% but its handle on its current cup base looks intact and it has successfully retested it break above a symmetrical triangle.
Looking at individual groups Monday it was energy that stood out as the XLE moved higher by .1% and it was followed up by utilities which added .3%. Lagging were healthcare and staples with the XLV and XLP losing 1.1 and 1.5% respectively. I believe energy is in the midst of a dead cat bounce, but opinions mean little. Follow the PRICE action and the ETF could be given the benefit of the doubt as it is trying to recapture its 50 day SMA and it is still right at the break above its recent 3 week tight trigger breakout near 75, as the three weeks ending between 4/20-5/4 all CLOSED within just .65 of each other. That taut action produced a good looking breakout the next week ending 5/11 of 3.9% in the THIRD best weekly volume in over one year, as just the two nasty weekly declines of 14.5% the weeks ending 2/2-9 were more active in trade. Breakouts that do not show much promise and quickly begin to fizzle are red flags, so this week so provide some insight going forward.
We discussed the casual diners last week with BJRI in Mondays Game Plan, but there have been many in the space that are holding their own weight. Below is the chart of NDLS and how it was presented in our Monday Game Plan this week. There were a few things to like with this set up as it flirted with the very round 10 number. Last week was its first CLOSE above the 10 figure, albeit by just five pennies, since the week ending 7/8/16 (I use arithmetic scales with my charting) and it also found support at its rising 50 day SMA for the initial time following a breakout above a cup base trigger of 8.30 on 5/11. This is often a good entry point if the line holds for those who missed the original breakout. Today it advanced more than 6% on a somewhat soft tape.