The Dow’s best performer Thursday, was also its highest priced, BA, giving the index a nice boost as it rose by more than 4%. It showed wonderful follow through after Wednesday bullish hammer off its rising 50 day SMA and the very round 25000 figure. All but three names in the benchmark fell today, and it was CVX, DIS, MSFT and INTC which fell ever so fractionally. Top to bottom it has gained 600 handles the last 2 sessions and that type of volatility can be considered bearish, as wide and loose trade is not preferred compared to taut and tight action. But one has to give credit where it is due as the futures were firm early on, and the markets not only refused to relinquish them but added throughout the day.
The Nasdaq was somewhat heavy Thursday as the index rose just .4%, half of that of the S&P 500 and Russell 2000 which rose by .8 and .9%. That was even with AAPL, the supertanker, hitting all time highs and the stock has lost ground just 2 days in August thus far. The bearish engulfing candle from 8/7 is now in the rear view mirror. Looking back it was recorded on weak volume and that day was down less than 1%, nothing to be alarmed about. On a weekly basis, so far heading into Friday it has fell .4%, as the S&P 500 is up by .2% and the Dow has achieved a nice 1% gain. Looking outside the box the weakness in some recent IPOs should be monitored. Some conclude the amount of new issues could mark a top, I am not one of them, but CWK and SONO are down this week by 2.9 and 6.2%.
Leadership was somewhat suspect with the staples leading the way as the XLP rose by 1.5% Thursday, and the utilities were among the top 4 of the major S&P major sectors as well. I did have a conversation with someone today trying to convince me that the staples can be looked at, in a small way, as technology with all the innovations in the space. I am not buying it, but one would be foolish to deny the ETFs PRICE action. One could make the case for a cup with handle breakout, but the handle did not form in the upper half of the base which makes it failure prone. WMT, the fourth largest component in the fund did skew the return today, but PG the largest weighting in the ETF is looking for its 12th weekly gain in the last 15.
Lagging today were groups that have carried the load recently with the cyclicals and technology, still higher but displaying poor relative strength as the XLY and XLK rose by .5 and .4% respectively. FB sure did not help the technology group as it is back in bear market mode, 20% off most recent 52 weeks highs, and the fact that it undercut its 200 day SMA so quickly after recouping it is certainly concerning. Other “old tech” plays, besides CSCO which ramped up 3%, like AMD and MU were RED on the day. AMD is doing battle with round number theory at the 20 figure, managing just one CLOSE above in 2018 on Tuesday by 2 pennies. MU is now off by 27% from most recent 52 week highs as the round 50 figure was pierced on Wednesday which doubled as 200 day SMA support too. As the saying goes nothing good happens underneath the 200 day, so a rapid recapture of that line is essential for the name.
Retail names have been having some big moves on earnings, some good and some bad. Of course WMT comes to mind today with a huge move for the behemoth up more than 9%, and was stopped by the very round par figure. That is probably temporary as it carves out the right side of a cup base pattern with a potential trigger of 110.08. On the flip side there was M which cratered 16% on Wednesday, a day after breaking above a bullish ascending triangle. Below is the chart of FL and how it was profiled in our Wednesday 8/1 Game Plan, and it REPORTS next Friday before the open. It still trades 16% off most recent 52 week highs and filled in a gap that was also a retest of a bullish inverse head and shoulders formation with a downward sloping neckline. It is setting up a double bottom pattern with a potential trigger just of 53.57, and one could enter now above its rising 50 day SMA.