Ominous Sign?
With all the excitement to end the week and talk of technology strength, the XLK Friday was the “worst” major S&P sector performer with the XLK up 1.3%. Give the ETF credit though as it CLOSED nearly 9% off intraweek lows and recorded a bullish WEEKLY hammer candle. Below is an illustration from Steve Deppe who tweeted this last week of the prior occasions when the XLK traded down -5%+ this week, yet finished the week in the green. It has only occurred 9 other times before, with one just last month to demonstrate how volatile the current environment has been. Every time is different, but there is a lot of red on the chart below. The WEEKLY bullish reversal of the week ending 1/28 came in the best WEEKLY volume in 2 years but petered out very quickly. There is something to satisfy your bias, whether bullish or bearish here. One still has to lean negative on the simple basis “that nothing good happens below the 200 day SMA”, but one has to respect last week’s candle and the Nasdaq registered a bearish death cross last week which normally happens after most of the damage has been done. Know your time frame as this is a short time frame (4 weeks out) and a small sample size.