Markets:
The Nasdaq powered higher by 1.2% Wednesday, just the index bulls want to see most involved. It CLOSED above the highs of the reversal Tuesday and continued its habit of ending on its highs on big trading ranges. Tomorrow will be a big test as FB has plunged after hours following its earnings release. Earnings from GOOGL gave it the energy to break above the 1200 number which was a bullish ascending triangle that began this February. The breakout has a measured move of 200 handles to the round 1400 figure.
The S&P 500 was the second best performer of the main benchmarks adding .9%. It is now quickly honing in on its 2873 cup base trigger where a breakout would record an all time high, as it sits just 1% off recent all time highs. Heading into Thursday it is higher by 1.6% and if that holds would be its third 1.5% weekly gain in the last four. Interestingly the VIX barely budged falling less than 1% as the major indexes roared ahead in the last half hour. It recorded its third spinning top candle in the last 4 days suggesting a move higher in the short term is a strong possibility.
Sectors:
Three of the major S&P sectors advanced more than 1%, as the industrials, healthcare and technology all rose by 1.5, 1.3 and 1.2% via the XLI, XLV and XLK. The XLI is still 7% off most recent 52 week highs and is looking to move above a symmetrical triangle. Today was the sixth CLOSE above its 200 day SMA and on its weekly chart one can see how it has traded between the round 70-80 numbers since January. It produced a bullish hammer off the 70 figure on 5/3 and registered just 3 CLOSES above 80 number earlier in 2018. One can enter the XLI with a buy stop above the triangle trigger of 76 then above a cup base pivot of 81.06.
Lagging Wednesday were the utilities and financials, although they both gained demonstrating how broad the rally was today. The XLU continues to show its strength as it refuses to fall below its 200 day SMA, which has now begun to flatline. A bullish golden cross is potentially about to occur. It sports an unorthodox bull flag formation, and is absorbing the 4 week winning streak that rose by a combined 8.8% between the weeks ending 6/15-7/6. Both the XLF and XLU are building the right side of possible cup bases on low volume, which is fine as many still are skeptical. Demand firm trade on any impending breakouts however.
Special Situations:
The transports are obviously a widely looked industry for their impact on the economy. It is a factor in the Dow Theory that goes back many decades as well. If these names are acting well, good are being delivered. The group is very diverse with airlines, truckers and rails and below is a best of breed name in the transport services. Here is a chart of WAB and how it was presented in our Tuesday 7/10 Game Plan. Not surprisingly it shied away from the very round par figure somewhat in May and June, but this month has motored above it, pun intended. It is higher 15 of the last 18 sessions, and up nearly 5% this week so far and has now moved through a 39 month long cup base trigger this week.