The major benchmarks fell Wednesday but did bounce, and did so at key moving averages. The Nasdaq kissed it upward sloping 50 day SMA precisely, like it did in both June and July. The tech heavy index did spend four sessions feeling if the retest of the important line was for real before resuming its powerful uptrend the last couple months. Time will tell if that happens once again. The S&P 500 did not come into contact with its 50 day but did register a bullish hammer candle within just 2 handles of the meaningful round number. Advantage bulls, as the break point the bears were given today was unable to be capitalized upon. The S&P 500 is looking at a possible back to back weekly decline, and it is still very premature but the index has not recorded a three week losing streak in near 26 months.
The Russell 2000 is now back below its 50 day SMA, which has been a rare occurrence since early April. There is a real tug of war continuing at the very round 1700 number with no weekly CLOSES above the level, with FOUR of the last eight trading above intraweek. Gold which many believe should be thriving in this type of uncertain environment lost 1.6% Wednesday and is looking like a sixth consecutive weekly decline is likely as the GLD is off by 3% heading into Thursday. The ETF is 14% off most recent 52 week highs, and has not registered an accumulation week since the week ending 2/6.
Utilities and staples were the winners today as the XLU and XLP advanced by .8 and .4% respectively. The XLU is up by 1.3% this week so far, and 7 of the last 9 weeks the ETF CLOSED in the upper half of its weekly range (the only weeks it did not lost a very pedestrian .5 and .6% the weeks ending 7/20 and 8/10). Healthcare was the third best actor among the major S&P sectors and the XLV fell by .2%. Today completed another handle on a cup base with a potential trigger of 90.48. The 3 week tight pattern looks likely as the last 2 CLOSED within just .18 of each other and this week so far is within that range.
Lagging in a very sizable manner Wednesday was energy as the XLE slumped more than 3%. That was due to three of the four largest components losing between 4-6%. EOG which makes up nearly 5% of the ETF, cratered more than 6% after a 128.06 cup with handle breakout lasted just 5 sessions. Breakouts that crumble that rapidly are a very bearish sign and it is now in correction territory 12% off most recent 52 week highs. CVX the second largest component slipped almost 4% and undercut its 200 day SMA for the first time in 4 months.
On sessions like Wednesday it always pays to search for names that shrugged off the weakness. Below is the chart of SCI and how it appeared in our Wednesday Game Plan this week. It emanates from a dreary funeral business, but it is one that is constantly in need. These types of defensive plays have come into vogue recently, but this name has been acting well on a current 6 week winning streak and most likely will make that 7 as it has advanced 3.3% this week headed into Thursday. SCI also brings round number theory into play as the 40 figure was resistance the two weeks ending between 1/26-2/2. During that time span it managed just one CLOSE above 40 on 2/1, but after today it has finished FOUR straight days above the number. It recorded a break above a 6 month cup base trigger of 40.38 on 8/13, and the move looks far from dead, pun intended.