Markets:
The Nasdaq was the under performer Wednesday, albeit with a fractional loss of .2%, and did for a second straight day CLOSED in the upper half of the daily range, a bullish trait. The tech heavy benchmark sits just 2% off most recent all time highs, and one has to come away impressed with its resiliency. Where are all the bears who proclaimed that the index was being held up by FANG names in past months? Three of the four names are in correction mode with FB down 26% from most recent all time highs. AMZN has done the best and notice it was stopped precisely at the very round 2000 figure today. They are onto new theories, and perhaps a valid one would be the health of the semiconductor arena. “Old tech” plays like TXN and INTC have not been invited to the party as they sit 13 and 22% off their respective highs. The group looks so bad it could be due for at least a dead cat bounce.
Where some spaces fail, others make up the difference. It could be the transports that recorded a stellar day on Monday. FDX just said they are going to start a six day working week with all the demand from ecommerce and we know the sector is rolling along, pun intended (FDX is being outdone by rival UPS on a 3 month time period with UPS up 5% and FDX down 4% and UPS has a dividend yield of 3% compared with FDX at 1%). The IYT did break above a bull flag trigger, and bulls want to see continuation on that move. Gold put in an excellent session rising more than 3% and completing a bullish morning star pattern. The commodity has acted poorly recently so careful if you think it may glitter up your portfolio.
Sectors:
Staples, energy and healthcare acted the best Wednesday as the XLP, XLE and XLV rose by 1.1 and .5%. The staples were aided in a big way by tobacco names as stock like MO and BTI rose more than 6%. The former broke back above its 200 day SMA for the first time since February and even with todays gain is still 15% off most recent 52 week highs. To be fair WBA and CVS did some of the heavy lifting as well. The XLE was helped along by crude CLOSING above $70 and bears which were looking for the right clavicle in a bearish head and shoulders formation may have to come up with another narrative. The industrials were the fourth best performers on the session.
Lagging today were technology and financials. The latter lost .9% making it easily the worst major S&P group. The XLF is still trading in a very taut manner and it will be interesting to see if the tight WEEKLY CLOSES continue this Friday. It is on the verge of recording a bullish golden cross, and amazingly some names in the space just can not seem to get it together as GS is now on an 11 day losing streak with the majority of those finishing in the lower half of the daily range. Even though the XLK did fall today it did manage to record a bullish hammer candle. Its weekly chart shows that it has not touched its rising 50 day SMA in over two years dating back to June of 2016.
Special Situations:
It is always a good exercise to keep an eye on names that buck weak sectors. One does not necessarily have to buy the stocks that exhibit that behavior, but in the very least a watch list should be in place. Below is the chart of NOV and how it was presented in our Monday 8/9 Game Plan. Notice it rode its 50 day SMA nicely higher since April, it did undercut it last Friday, and is currently trying to reclaim the line. Remember it is not a penalty to drop below it, but the stock must stay close and recapture it in prompt fashion. It did record a bearish evening star pattern on 8/1, with a doji on the middle day of the 3 day formation, and that did lead to a 10% haircut. This chart in my opinion still looks productive with a stop below 42.75.