Markets:
The Dow finally succumbed to too many touches of its 200 day SMA and CLOSED underneath the secular line. It is looking for a rare third consecutive weekly loss, which has not happened since a 4 week losing streak in May ’16. It has declined 1.9% so far, and the bullish harami cross recorded yesterday has been nearly negated already. Today finished 450 handles off intraday highs, meeting resistance at a now declining 50 day SMA.
The Nasdaq is off by 3.2% this week so far already and it is following through lower, after last weeks rare doji candle. Looking at some of its largest constituents one can see how one can take a negative view. GOOGL has now recorded a double top at the round 1200 number with bearish shooting star candles on 1/29 and 6/20. Keep in mind its chart trades wide and loose, a hallmark bearish characteristic. AMZN registered a bearish shooting star weekly candle last week at all time highs and the bearish engulfing candle from 6/21 looms large.
The VIX may be signaling something ominous as it looks to CLOSE above it WEEKLY 200 day SMA for the first time in 8 weeks depending on Fridays finish. In all of 2017 it ended above its 200 day SMA just twice in 52 weeks, and its break above a bullish falling wedge looks good after todays bullish hammer candle.
Sectors:
Energy was the best performer for a second straight session Wednesday with the XLE rising by 1.3% almost tripling its second best rival. It did CLOSE above its 50 day SMA and registered a bullish inverted hammer candle. Four of the five last session finished in the lower half of the daily range, which speaks to wary bulls.
Utilities continue to impress as the XLU was the second best actor today higher by .5%. Bears have tried to push this ETF lower to no avail, and the selling pressure may be abating. Since the week ending 2/16 there have been firm weekly advances of 3.2, 3, 2.8 and 3.1% the weeks ending 2/16, 3/30, 4/27 and 5/25. It is higher by 2.3% this week thus far and may be headed for another strong week depending on Fridays CLOSE. On its weekly chart one can see the very real potential of the rare bullish three white soldiers formation.
The financials are now on a 13 session losing streak, not a typo, and this week is lower by 2.7% so far. I did hear an unconventional view the interest rates may be headed lower and that QE may be initiated once again. The way the sector is acting it may not be so far fetched. The ETF has not witnessed a week of accumulation, volume supporting a firm weekly return, since the week ending 12/1/17 which jumped 5.2% in double active weekly volume.
Special Situations:
Technology has been a soft spot for sometime as the XLK is now lower by 3% this week headed into Thursday, and that is on top of the 1.3% loss the week before. Optimists may say that the last two times that back to back weekly combined losses occurred the ETF seemed to stabilize. The weeks ending 2/2-9 and 3/16-23 fell by 7.3 and 9% respectively, but the very next weeks rose by 5.7 and 1.8% the weeks ending 2/16 and 3/30. Below is the chart of DXC and how it appeared in this Tuesday’s Game Plan. It is looking at a potential third weekly loss in a row down 2.8% this week headed into Thursday, and that would be only its third 3 week losing streak since it started trading public in April ’17. It is failing at the round 80 number which was previous support, and look for that figure to be resistance going forward or the short catalyst will no longer exist.