Apple Ripe? The stock that is basically a proxy for the Nasdaq, at more than 8% of the entire tech heavy benchmark, is on a roll. They say things do not go up in a straight line, but this name is defying that adage, especially for a name that is a trillion dollar market cap which is not easy to maneuver easily (very small, select group!). However it may be meeting its match here, with a couple things that may provide a roadblock. It did record a bearish harami cross, that occurred at the very round 300 number, after advancing 17 of the last 19 weeks. It is hard to bet against this name, and I am not doing that here, but a good risk/reward scenario is setting up to the downside. And if that transpires, it will have big implications for the overall markets. In the last month it has not registered back to back down days. This could decline 10%, and still be just in for a contact of its rising 50 day SMA.
Defense Wins Championships: Of the two groups that displayed strength early on amid a sea of red, ones that were expected too, only one had staying power. The defense and energy spaces, both started on a strong footing, but it was defense that was a clear cut winner when the closing bell rang. The XLE CLOSED down, and more than 1% off its intraday high Friday, recording a bearish engulfing candle in the process. Sure it is very top heavy with integrated giants, and maybe the comparison should have been made against the XOP or OIH, both of which rose today. But let us give credit where it is due to the defense arena. The XAR advanced 4.2% the last 2 days this week alone, and 4.3% for the week, its third best WEEKLY gain in the last one year time period. It broke above a cup base pivot of 112.98 today on above average daily volume, and that is impressive given the ETFs second largest component TXT, is in bear market territory, 23% off most recent 52 week highs. Below is one of my favorite WEEKLY charts in the group of RTN.
Good Sign: Below is a chart of how the major S&P sectors fared in 2019 (Novel Investor), and one can see how the financials scored a notable third place finish among the eleven groups (just the 3rd time since 2007 that the space concluded a year in the top three). Perhaps a good omen is if one looks at the performance the following year after a 20% plus yearly advance. Notice in 2012, the group jumped 28.8%, and backed it up with a gain of 35.6% in 2013. It happened again in 2016 with a 22.8% advance, and the next year in 2017 rose 22.2%. Will the lofty 32.1% gain in 2019, be backed up by another solid achievement. Of course no one knows, but we know typically trends in motion tend to remain that way, more likely than they are to reverse. Over the last 6 months the XLF was the second best actor among the 11 S&P groups. One obvious are to watch, is the round 30 number. That was the area of a long cup with handle breakout that began in May 2007 and was taken out just over a month ago. Remain steadfastly bullish as long as that figure holds.
Biotech Ebb: The biotech group appears to be cooling off into year end, as last week ended a 12 week winning streak, which was accompanied by solid volume. A bearish shooting star was recorded last week near the influential, very round par number (the length of the 2.6% intraweek reversal was not too significant). More concerning was the level which it occurred at, 100 is often at least a temporary roadblock on its own, which was resistance dating back a year and a half. Investors would most likely relish a pullback toward the double bottom pattern breakout that was taken out the week ending 11/29 that rose more than 6% in above average weekly trade. Of course the market never gives us what we want, so as always one needs to be prepared for any scenario. A move above the very round par number could be substantial. Former "giants" AMGN and BIIB ended 2019 with strong Q4's. CELG was taken out the first week of 2019, can one of the aforementioned two do announce a blockbuster deal? If any suitor had a large appetite, one would just have to look at BMY, as this year dragged on as it was first hammered, but ended on a high note.