Markets:
For the second straight day it was the dodgy Dow that eked out a fractional advance, and the Nasdaq and Russell 2000 underperforming as they dropped .9 and .8% respectively. It was the semiconductors that once again traded soft. The SMH, which bearishly trades wide and loose, is off by 2.4% this week so far. Since the week ending 3/16 it is still making lower highs and higher lows as the ETF coils. One can make the case for a symmetrical triangle, but its weekly RSI is holding the bullish zone threshold 50 figure since February. It has been in contact with that number multiple times since February, perhaps too many. Many names in the group have been weak, with AVGO down almost a quarter of its value from most recent 52 week highs. KLAC, another name that trades anything but taut lost nearly 10% Thursday. LRCX is 32% off most recent 52 week highs, and I think you get the picture. The spaces weakness is NOT a nascent development.
The VIX is still CLOSING off session highs, but looks like it is coming alive. It CLOSED pennies below its 200 day SMA, a line it has finished above just twice in the last 2 months. On its weekly chart is has the look of a bullish falling wedge pattern, and it feels like the proverbial beachball held under water. The transports via the IYT are still sporting a bull flag formation, and the last 3 weeks have CLOSED tight all within just 1.50 of each other. It is attempting to post a ninth weekly gain in the last 10 up .5% heading into Friday. With tech beginning to feel heavy I have a feeling this group is going to have to contribute more than it is accustomed to.
Sectors:
It was the utilities arena that led, and it is becoming an all to familiar habit. The argument that investors are searching for yield as they have been unable to generate it in the fixed income market is valid. Again I do not focus on the why, just the PRICE action and it can not be ignored. The XLU rose .6%, double the next two strongest competitors Thursday with the staples and industrials gaining .3%. The ETF is looking for its sixth 2% weekly gain in just the last 3 months as it is higher by 2.3% heading into Friday. It is now just below a WEEKLY cup with handle trigger of 54.86 in a pattern that began the week ending 11/17/17.
Lagging Thursday was technology and energy. The XLK slipped .7% and the XLE by a whopping 1.8%. The XLE is lower by 2.1% so far this week and the triple top in the 78-79 dating back to December ’16 looks solidified. It is now nearing correction mode off by 8% from most recent 52 week highs, and looking left on its chart it has been soft since recording an ugly bearish engulfing candle the week ending 5/25 slumping 4.5% in active volume. It is 1% away from testing its still upward sloping 200 day SMA, but is also doing so so quickly doing so on 8/15. The 5 day losing streak has been accompanied by bulging trade.
Special Situations:
The retail group now looks like it will be asked to do the heavy lifting for the markets. One can throw in transports as well, and after all they move around goods consumers purchase. The group is becoming a bit more bifurcated recently, as today we witnessed pedestrian gains in GIII and TIF. On the flip side weakness was seen in stocks like URBN RH DLTH and TLYS. Below is the chart of CROX and how it appeared in our Thursday 7/12 Game Plan. It has recorded a wonderful turnaround since June ’17, and is looking for an eight weekly gain in the last nine. Since breaking above the very round 20 number on 8/21 it has seen just one CLOSE underneath it. On that same session it broke above a 19.64 cup base trigger and has minded its own business, gradually churning higher. The bulls have a good grip on this play, just like the soles of the shoes the company produces.