Chartsmarter Insights

Bearing Fruit: AAPL, the worlds most valuable company at over $1.4 trillion (one of just 3 in the prestigious club, with MSFT and AMZN, with GOOGL no longer in), just ahead of Microsoft, hit an all time high Friday. One could interpret its recent move as a breakout above a cup with handle, or a bull flag with both having roughly the same pivot at the round 320 number. It has rallied well more than 100 handles from the intraday low on 3/23, the middle session of a bullish morning star pattern completed the very next day. One thing that has been interesting to witness is there has not been one single day of accumulation, a powerful rise on better than average daily volume, since late March. Depending on your bias one could try and back it up, with the bears saying the move on thin trade is likely to reverse very soon. The bulls would declare that once belief truly takes hold, in robust volume, its powerful rise is likely to accelerate. All that matters is PRICE, and that should keep any longs content, and others looking to establish a position very interested. 

Swimming Upstream: The financials nascent strength was on display as the XLF was one of only three of the major S&P sectors to advance Thursday rising 2.2% (they more than doubled the second best actor in the industrials with the XLI gaining 1.1%). On a one week look back period the XLF is second best group, just behind energy, and some may declare their is a "dash for trash", as these spaces have been soft overall. The XLF is still lower by 20% from most recent 52 week highs, while the XLE is now 36% off its own yearly peak. Know your time horizons as this fledging power is also hanging tough on a one month time frame too, bested by just the industrials. One can get the picture now as we are seeing a clear rotation into cyclicals names. They only question is this temporary, or something longer lasting. Of course no one knows the answer to that question, but it would pay to focus on stocks in this financial arena. Sure they are playing catch up and have lagged, but give them merit until it is no longer technically fitting.

Awakening The Sleeping Tech Giant: We have brought up this debate before recently, and the question is still up in the air as to whether technology is just resting or is the strength in the cyclical names over the last one month period transitory? One can see on the chart below, during that one month time period technology is just the fourth best major S&P sector performer of 11. And in front of it are groups tied to the economic cycle like energy and materials, and nipping at techs heels are the industrials too. My belief is that technology is just prudently pausing, and strength often begets more strength. AAPL, basically a proxy for the Nasdaq, is sniffing out a cup with handle pivot of 324.34. AMZN still sits just 2% off most recent all time highs, and MSFT has carved out its own cup with handle trigger of 187.61. If any of these, or perhaps all three break out, FOMO will likely just be getting started with the $8 trillion on the sidelines ready to start a stampede. Capital gets allocated to where it is treated best and with the Nasdaq just 3% off most recent all time highs, and the S&P 500 10% and the Dow 13% off its own peak, do not be surprised when a fresh, well rested Nasdaq comes into contact with the very round 10000 figure.

Growth Still Getting Job Done: The competition between "value" with the XLV, and growth concerning the XBI, still is in favor of the latter in a big way. The XBI is now higher by 10% YTD and 31% over the last one year period, while the XLV is UNCH YTD and up 17% over the last one year period. The bulls are defending the very round 100 number well, and all 5 of the last 8 sessions that rose for the day CLOSED right at the top of the daily range, a positive trait. The 5/27 and 5/29 sessions both bounced robustly off the 100 figure, both finishing 3.5% above the number. Let us give credit where it is due, and the XLV is still holding the 100 number too, but its bull flag is getting a bit long in the tooth to be considered valid. Give the "value" ETF some applause for not slipping too much with PFE, its third largest component down by 7% Monday. Speaking of the round numbers, UNH recorded its fourth straight CLOSE above the 300 figure.