Chartsmarter Insights

Tight Knit Up Top: Below is the chart of the one month returns for the 11 major S&P sectors. Bulls have to be pretty excited about the foursome up on top of the leaderboard, perhaps not so much for the energy group. But that group has been decimated, but the sectors in the 2-4 spot are just what growth investors want to see. The XLE is still lower by more than 35% in 2020 thus far, but showing more consistency the XLC and XLY are 3 and 6% thus far this year, while the XLK is HIGHER by more than 3%. As many declare their frustration that a limited number of stocks is pushing benchmarks higher, and by the way that number is expanding by the day, to me it makes it easier to spot where to deploy capital. Sure it could reverse in a rapid manner, or it could continue to linger for many months or years. No one knows, and it is why I favor technical analysis, as it will keep you on the train until it derails or malfunctions. The more investors fail to recognize the rally, the longer the ride ensues.

Nasdaq Hurdle: It has been a long run since the bottom in mid March for the Nasdaq more than 3000 handles ago after spinning top candles on 3/18 and 3/23 were registered (they are often adept at calling a potential change in the prevailing trend, especially when they occur in close proximity). To this day there seems to still be a lack of belief in the rally, which could continue to fuel the flames. We have heard comments from high profile names like Dimon saying "bad recession" ahead. Gundlach this week declaring his short position, albeit he did mention the S&P 500, which is lagging the Nasdaq. Talk however is cheap, and PRICE action pays, and if we can see a decisive break above the cup with handle formation present with the Nasdaq on the chart below, it could be off to the races. No, unfortunately not the "Run For The Roses" which was supposed to happen this Saturday in Louisville, but a very vigorous jump higher for the tech heavy benchmark toward the very round 10000 number. The Nasdaq is higher everyday this week (although 2 doji candles have occurred this week), and keep in mind the positive action on Mondays is still a factor up 5 of the last 6.

Not An Industrial Revolution: For growth investors if one looks back at the last one month period, it looks pretty rosy. The only two of the major eleven major S&P sectors lower in the time period, are the "defensive" staples and utilities. The third "worst" actor is the industrials, which happens to be a large and diverse group. It is keeping its head just above the UNCH mark, which shows its reluctance to keep pace with an overall market, that seems to be running away from investors. Below is the ratio chart comparing it to the S&P 500, and it is a chart not easy on the eyes. The XLI is lower 2 of the last 3 weeks, and last week registered a big reversal CLOSING 6% off intraweek highs, and at the bottom of the WEEKLY range. The ETF is now 28% off most recent 52 week highs, and has broken beneath a bearish rising wedge at the 62 number, and is struggling to stay above its 50 day SMA. That softness is hiding some strength within, and if one looks they shall find.

Consumer Proxy: Many argue whether Apple, obviously a technology company, could be classified as a consumer play, as its loyalty among purchasers may only be rivaled by Tesla, for love of their products. Either way the performance of its stock has a profound effect on the overall markets, and its success or failure has consequences. Long time readers of mine know my affinity with round number theory (fellow mega cap play GOOGL bounced very powerfully off the 1000 number in March), and AAPL is dealing with the 300 figure currently. After slicing 300 on 3/24, it has recorded just one CLOSE above it on 3/4, and Tuesday failed there once again. The stock is looking for its first 5 week winning streak since January, and when this name gets hot it can move powerfully in an upward trajectory. Let us not forget the recent 124.3% advance, during the weeks ending between 1/11/19-2/14/20, falling just 16 weeks in that 13 month time frame. Deja vu?