The Nasdaq was the big laggard Thursday, and you had to be living under a rock for the day if you did not hear the incessant chatter regarding FB earnings. It makes up more than 4% of the index, and I think the Nasdaq deserves a lot of credit for maintaining its CLOSING above the round 7800 number which negated the bearish engulfing candle their on 6/21. Keep in mind that precipitated a 400 handle drop top to bottom in just the next 6 sessions. Important going forward will be the health of the AAPL breakout above a 194.30 cup base trigger on 7/25 which stalled today (it is the largest component in the Nasdaq making up 6.6%). We know the best breakouts work right away.
Do not sleep on the Russell 2000 as it approaches the round 1700 number (it was above intraday but we are always interested only in CLOSES). It outperformed handsomely Thursday rising .6%. The S&P 500 and Dow are enjoying nice gains thus far for the week with Friday to go higher by 1.3 and 1.9% respectively.
The gold bugs are having a rough go of it as the GLD has lost value 10 of the last 14 weeks, and is down another .7% this week heading into Friday. The ETF is now 11% off most recent 52 week highs, and the tape on some of the individual names is stunning. GOLD is now 33% off most recent 52 week highs, and best in breed RGLD is now 10% off its and it has been waffling since a bearish gravestone doji candle the week ending 7/6. Intraweek that week it was above a nice looking cup base trigger of 94.49 in a 10 month pattern.
Energy, industrials, staples and utilities led Thursday. The XLE rose by 1.2%, and to its credit has not followed through to the downside following the heavy volume bearish engulfing week ending 5/25 that slumped 4.5%. The ETF is enjoying its best week higher by 2.8% heading into Friday and if it holds would be its best weekly gain in the last 11. I have been skeptical on the group, and if it breaks above 78, the bearish descending triangle would prove my negative thesis wrong.
Lagging Thursday was technology as the XLK fell by 1.8% as FB cratered nearly 20%. Bulls will point that it is just giving up a chunk of its 40% advance from its last earnings reaction. To me that is a weak argument, and a good illustration of the old adage taking the elevator up and the staircase down. The velocity of the move to the downside is concerning, and I would personally need to see some bottoming candles or even a gap fill toward the round 160 number from the 4/25 session, the level of where it last reported numbers.
At ChartSmarter I purely make decisions based on PRICE action as I am a technician. Now of course I will look at some fundamentals, albeit vaguely. I will see how an earnings story may be generating a turnaround. Sometimes one can see a better management team in place comparing peers, but to me that will always be seen within the confines of the chart. Below is a good example with HAS, and how it appeared in our Thursday Game Plan this week, as it delivered a nice earnings reaction on Monday up nearly 13%. Peer MAT, its redheaded stepchild in my humble opinion, registered a soft reaction today getting hit by more than 4% (one other player in the small field JAKK is barely relevant and is way off all time highs from June ’07). That may have given investors an entry into HAS today on weakness, as it has now CLOSED four consecutive times above the very round par number.