Palantir Hype: The SPAC hype that reached a frenzied pace, to put it mildly at its height has come screaming back down to earth. Last week a couple had their capital returned to shareholders. Some stocks that have crashed in their own right include SKLZ this week traded below $1 after being in the upper 40s last February. Below is one that is still below that $ 10-a-share PRICE but has some things going for it. This week is showing some excellent relative strength higher by 9% heading into Friday, while the IGV is up less than 1%. Famed investor Stanley Druckenmiller, who is extremely bearish on the market, has a sizable position in the name. Its WEEKLY chart is its sporting a bear flag pattern with a move below 7 carrying a measured move to 3, but until that occurs one can stay long. If 7 is breached one can flip their long to a short but for the time being respect its clout.
Defensive Bifurcation: In the discount arena, the group is dominated by a select few. TGT is a laggard now 42% off most recent 52-week highs and still feeling the wrath of the week ending 5/20 that fell nearly 30%. Currently, it is right at the WEEKLY CLOSE of that dreadful week. Best-in-breed DLTR has not been immune to the market's frailness. It has recorded two recent WEEKLY losses of almost 20% in the weeks ending 5/20 and 8/26. OLLI a former favorite continues to deal with the blockade at the round 60 number as it attempts to carve out a double bottom base. Below is the chart of COST and it is trying to put the nasty 6-week losing streak the weeks ending between 4/15-5/20 that traveled from the rough round 600 number to 400. This week is showing good relative strength against the staples up almost 5% while the XLP is down fractionally. Perplexing is how chief rival BJ is only 4% from its recent peak while COST is still 20% off its ascent from early April.
Best Offense Is Good Defense: Within the healthcare arena market participants can find a little bit of everything. If they want mature dividend plays they can grab some conservative pharma. If they yearn for volatility they can look for exposure to biotech. Then there is more stability usually with healthcare providers. Then there are medical equipment and supply stocks. Of course, not all act this way and there will be leaders and laggards within each of these niche spaces. In the "safe" pharma names for example GSK is now yielding 6.5% as it looks for its ninth WEEKLY loss in the last 10. But below we look at the "risk on" relationship in healthcare at the moment through the lens of the ratio chart comparing pharma to biotech. The former, as one can see has been lagging, but that could be about to change with its recent break above a bear flag. A lot will depend on top holding MCK that right now is sporting a bear flag pattern. A CLOSE below 340 would carry a measured move to 310, roughly at its 200-day SMA now. LLY also needs to get above a third lower high here since a bounce off the very round 300 number at resistance within a bearish descending triangle. "Defense" is not always as it seems.
Forbidden Fruit: The largest company on planet Earth is at an inflection point. Earlier this month it found a bit of support at the 61.8% Fibonacci retracement from the mid-June low to the mid-August high. That was during a 7-of-8-week winning streak but the stock even with that impressive move made a third lower high. The third lower high was a WEEKLY bearish gravestone doji candle from the week ending 8/19. Each of the last 2 weeks CLOSED firmly upon their lows and well off their intraweek highs with the week ending 9/16 fourteen handles off its peak and last week by 8 points. We all know just how influential AAPL can be with its dominance in the major benchmarks and a plethora of ETFs and mutual funds. It could possibly finish with its third consecutive WEEKLY CLOSE with a 150 number, and we know from that type of taut action comes explosive moves. Consider the 148 area an absolute must to hold or the latest selling would pale in comparison to what may be.
Bears Gaining Steam: Bear markets are ruthless. There is not a lot that bulls can hang their hat on these days. Interest rates and the dollar continue to skyrocket. We know that last week was one of the toughest weeks of the year, and overall PRICE action has been lousy. Three of 5 days last week witnessed all 11 of the major S&P sector falling, and on a WEEKLY basis, every sector fell with defensive staples, utilities, and healthcare acting "best" but still falling between 2-3%. Looking for a silver lining that has been a dangerous endeavor, the semis, like the Nasdaq recorded a mild reversal Friday with bullish hammers, for the SMH at a key level. Interesting were they did not take out the summer lows (SMH did by less than .50 Friday but CLOSED well above) as software did. This is a very minor green shoot but one we could look back on if this market can find its footing going into a strong seasonal mid-term election period starting with Q4. Sentiment is lousy too. But respect the power of the bear and if those lows on the semis are taken out on a CLOSING basis look out below.