Most of the major averages CLOSED near the UNCH mark, with the exception of the Russell 2000 which ended Friday higher by .4%. The Nasdaq recorded back to back CLOSES above the very round 8000 number to end the week, and touched its rising 50 day SMA as well to mark the FOURTH consecutive month it has done so. Is the line becoming stronger, or is the more times it is felt make it more likely to break through on the downside? The tech heavy index was certainly helped by the action in the semis as they followed through decently from Wednesdays hammer. For the week it recorded a doji candle, which could signal a fatigue in the downtrend which still has the SMH 7% off most recent 52 week highs. We prefer to see plain old boring PRICE action with NO news move the group, so we will see how the space acts next week without the announcements of upgrades and prices hikes which were seen today with NVDA and AMD.
On a WEEKLY basis it was the reverse of what was seen last week as the Nasdaq lost 2.5%, the worst performer of the major four, and this week it was the best behaved as it carved out a 1.4% gain. The S&P 500 rose every day this week higher by 1.2% and this month has bounced off the highs made 1/26 making it a successful retest and so far looking like prior resistance will become support. On its daily chart it has the look of a bull flag breakout which began at the round 2800 number, and the trigger roughly at the 2900 number giving it a measured move to the very round 3000 figure. On a YTD basis there has not been a change on the leaderboard in months with the Nasdaq still commanding a big lead up 16% in 2018, followed by the Russell 2000 up 12.1%, the S&P 500 by 8.6% and the Dow by 5.8%. Let the bull market carry on.
There was a fair amount of bifurcation among the major S&P sectors, with the financials coming to life leading the way as the XLF rose by .7%. They were followed up by energy and the industrials with the XLE and XLI advancing both by .5%. On the downside the staples and healthcare lost .3%, the cyclicals fell .4%, and the utilities declined .5%. The staples once again failed to CLOSE above the 55 number, which remember is the neckline in a bullish inverse head and shoulders formation. The XLK was UNCH on the session and just missed CLOSING in the upper half of its daily range everyday this week Friday.
On a weekly basis the three standouts were energy, industrials and technology with the XLE up 2%, XLI by 1.9% and the XLK by 1.8%. Energy was helped along as crude is attempting to build the right side of a cup base, but is having some issues with the round 70 number. That level has pushed it back since late July and it has recorded just 3 CLOSES above 70 since then even though 12 sessions were above intraday or within pennies of the number intraday. The industrials continue to defy tariff gravity as the XLI is now on a 5 week winning streak and edged closer to the long cup base trigger of 81.06 in a pattern nearly 8 months in duration. The only major S&P sector to fall for the week were the financials as the XLF gave up .4%.
Healthcare has seen some really nice action recently. Since the early summer one would have reaped nice rewards had they invested within. The IHI, representing the device space, is now higher 18 of the last 23 weeks. The IBB looks a bit more suspect as it is stalling following a break above a 119.40 cup base trigger taken out on a WEEKLY basis the week ending 8/31. Below is the chart of a small cap play CARA and how it was presented in our Wednesday 7/25 Game Plan. This week the stock gained nearly 10%, and it did retest that flag breakout near 18, and held firm a good sign. Since then it has been comforted by its rising 50 day SMA, and like most leaders is ready to offer an add on buy point. Enter or initiate a new position above a cup base trigger of 22.39, which could also be interpreted as a longer cup with handle trigger in a WEEKLY pattern that began more than 14 months ago.