The major averages seem to be defying the weak seasonality this month, as they put each negative spin on them in the rear view mirror quickly. The Nasdaq, Russell 2000, Dow and S&P 500 all rose in the 1% neighborhood. Each one is doing just what it should technically as the Nasdaq has quickly reclaimed the very round 8000 figure, and once again its rising 50 day SMA has given it a prudent rest as it gathers stamina to thrust higher. Give the Russell 2000 credit as it touched the 1700 number and bounced firmly, now 1% above the figure. It seems like former resistance is now a reliable floor, until it is not. The possibility of a bullish MACD crossover is nearing and last time that occurred in mid August it produced a 4% bump higher.
With all the euphoria surrounding the major benchmarks Thursday, no one informed the VIX. It CLOSED higher on the day by 1.3% recording a bullish harami. It still swims underneath its 50 and 200 day SMAs, but it did make a higher low with the hammer registered on 8/9 right at the very round 10 figure. The possibility exists that a symmetrical triangle is taking shape. International markets rose nicely, and of course we all know the story with emerging markets (Merill Lynch Global Fund Manager survey has optimism at SIX year lows, thanks John C.), but Germany via the DAX is now higher 7 of the last 9 session since a doji candle on 9/7. It is at a critical level here as it retests a bearish descending triangle breakdown, which did have a 1000 handle measured move lower that never materialized. Many will say the mean reversion trade is on, but the domestic indexes will make that difficult as they show no signs of slowing down.
There was a bit of questionable leadership on Thursday as the staples were the best performer higher by 1.2%. The three biggest components of the ETF PG, KO and PEP, which make up more than a third of the fund, all rose more than 1%. Today it rose above the bullish inverse head and shoulders trigger of 55 which carries a measured move to 61. But truth be told the rally was broad based and technology and materials both advanced more than 1% too. The XLK is now positive for the week and looking for its seventh weekly gain in the last 8. The XLB looks assured to record just its second weekly CLOSE above the round 60 number in 6 months.
Even the laggards Thursday were not dinged with any authority. Energy, utilities and industrials all ended the session near the UNCH mark. The XLE recorded an eight straight up day, but none of the gains were powerful with all up less than 1%. That is the type of action I prefer, gradual and taut. The ETF is looking for its first back to back weekly gains in almost 3 months to give you an idea of how it has struggled somewhat. The XLI is not surprisingly acted in an apprehensive manner as it has touched the round 80 number the last 3 days, but has been unable to CLOSE above. I still believe the 81.06 cup base trigger will be taken out firmly this fall. BA will have a big say in that scenario.
The XLF added another .8% Thursday on top of Wednesdays 1.7% jump as the right side of its cup base strengthens. It is now above the 28.50ish area that was problematic for the ETF dating back to this spring. Although many think of the fund as a traditional money center fund, the overall space is vast. Below is the chart of EEFT, a financial administration name, and how it was presented in our Thursday 9/13 Game Plan. This stock continues to move northward following a nice break above a long WEEKLY cup base trigger of 101.17. As big proponents of the round number theory, this stock traded above 100 intraweek the weeks ending 10/20-27/17 (arithmetic) but was unable to CLOSE above it. This week is looking for its second consecutive finish above 100 and its tenth weekly gain in a row. Former resistance at 100 should now become support offering a good risk/reward scenario here.