The Dow recorded a bullish harami cross Tuesday as it touches its 200 day SMA for a third time in the last 3 months. It is still down 9 of the last 11 sessions since three extraordinarily tight CLOSES between 6/8-12 which all finished within less than 5 handles of each other. Easily the best performer from within was GE up nearly 8%, not helping the price weighted index as it is a teenager, but it may benefit as it is being booted from the benchmark and names historically act better the following year then the names that replace them.
The Nasdaq rose .4%, a lukewarm showing but hardly making a dent into the prior 3 day losing streak that had a 300 handle range from top to bottom. AAPL will have a big say there and although it has lost its bull flag trigger of 190 in rapid fashion, it did successfully retest a double bottom trigger of 179.04 taken out on 5/4 today. It will have a big say as the largest component makes up nearly 7% of the Nasdaq.
Just to give investors an idea of how vastly the US is outperforming take a look at Investors Business Daily’s screenshot from this weekend of nearly every country sector ETF is in the red YTD, with the exception of Small Cap China. Brazil, a big laggard, is off nearly 21%. Talk about a lonely environment. Is this relative strength to be applauded, or will it drag the US major averages lower with it eventually?
Energy was the best behaved sector as the XLE advanced 1.3%. I still believe it is a dead cat bounce, but my opinions mean little. Price action shows it did hold the bull flag breakout at 74 from 5/9 and it is now flirting with its 50 day SMA and can be bought above their and added to through a double bottom trigger of 77.75.
Runner up today were the cyclicals which was good to see. The XLY already benefitting from a nice retail space, received an added boost today from the homebuilders and the ETF rose .7%. LEN gave a brief burst of euphoria to long shareholders after earnings were reported this morning, but CLOSED underneath its downward sloping 50 day SMA. This is most likely temporary as the name is an alarming 29% off most recent 52 week highs.
We always like to capitalize the word CLOSE in our work, and for good reason. Many times there will be whipsaws above a long or below a short order intraday, only to see price reverse and go against you. Of course this is for traders who have a longer time frame as they will hold stocks overnight, and for many months as I like to. Below is the chart of a lagging casual diner play JACK and how it was presented in our Monday 6/4 Game Plan. Anyone who attempted to get in front of the pivot was hurt as the bear flag that aligned with the round 80 number was never breached (it held on 2/9 as well). It has since almost 10% and is approaching the very round 90 number. There is no long catalyst, but is a good example of being patient and waiting for your spots.