Markets continue to climb the proverbial “wall of worry”, or at least we hear pervasive negative headlines from the media all the time. Bulls are getting just what they want as the Nasdaq and Russell 2000 continue to shine. The Nasdaq and Russell 2000 added .7 and .8%, while the Dow and S&P 500 lagged. The Dow fell marginally, and its relative weakness to its peers is a good thing. The names within tend to outdo riskier plays late in a bull market as investors clamor to defensive plays, suggesting that the “most hated” bull market in history still has legs. The Nasdaq has to be given credit for acting well even in the face of “old tech” ORCL’s debacle down more than 7% today, and now resides in bear market mode 20% off most recent 52 week highs. It certainly does not have the clout it used to, years back it would have a more profound effect. The market is also holding up despite FDX down 5% this week. Give credit where its due.
Looking at individual sectors Wednesday there was a better mix than usual at the top of the leaderboard with cyclicals and energy higher by .5% and .4% and technology by .2%. The utilities and staples did manage to eke out very small gains and lagging today were the financials and materials. The lack of vigor in the financials has given the utilities newfound strength. The XLY continues to gather momentum above its recent breakout through a 109.44 cup base trigger on 6/7. Technology via the XLK continues to trade very taut and the 3 week tight pattern we spoke about recently is looking more likely. This occurring near all time highs makes this set up even more bullish. The bears inability to mount pressure on the group, while the bulls can rest as PRICE takes a breather to regain stamina for the potential next leg higher, has to be considered a big positive.
When one speaks of a strong economy it does not necessarily translate into a firm stock market. The two are often disconnected and many tend not to believe that. Below is a good example of that with the chart of WHR and how it was presented in our Tuesday 5/29 Game Plan. The stock is now on a 4 session losing streak and now down by a whopping 27% off its most recent 52 week highs. This is a household name which slumped more than 7.1% the week ending 5/25 which also recorded a bearish engulfing candle in gigantic trade. It has declined by nearly another 4% this week heading into Thursday and it had issues with the very round 200 figure last June and July which is where the downtrend began to pick up some steam, pun intended.