Apple Blooming: Without much fanfare AAPL has become the most valuable company in the world once again, surpassing MSFT, although both are well ahead now of the trillion dollar market cap. Like BUD has the "king of beers" moniker, Apple must have that distinction within technology. As many have anticipated a pullback in AAPL, it has not materialized as it shows the classic definition of a strong bull market, not letting one in, as it seemingly marches endlessly higher. The stock has a profound effect on the markets as it represents nearly 8% of the Nasdaq, being its top component. For that reason it is often thought of as a proxy for not only the Nasdaq, both most other indexes as well. Since the Nasdaq bounced precisely off its upward sloping 200 day SMA on 10/3, it has jumped almost exactly 1000 handles top to bottom. That move will most likely have to be digested, and let the moving averages catch up to price, but the benchmark trades more than 400 handles ABOVE its 50 day SMA. Getting back to AAPL which has the biggest impact on the Nasdaq, it is sporting a bull flag, a continuation pattern higher with one of the most successful patterns. The bears may have to wait a bit longer.
With an almost incessant banter revolving around the biotechs, some sub groups are flying under the radar. The healthcare providers have been showing some nice quiet strength up 8% YTD, and the ETF sports a nice dividend yield of 4%. The fund has traded between the very round 150-200 numbers for the last 13 months, and now shows a bullish inverse head and shoulders formation. The chart looks very similar to top component UNH, which makes sense as the name makes up 23% of the ETF. CVS, the number 2 holding reports earnings before the bell Wednesday, and recently broke above a bull flag pattern. ANTM has the look of a beachball being held underwater as trades narrows just below its 200 day SMA. CI is riding a 5 week winning streak, and looking to break a string of lower highs on its WEEKLY chart. Rounding out the top 5 components is CNC, which looks attractive as long as it does not trade too far below the very round 50 number, which would be a failed gap fill. The IHF has run as of late, but still trading 12% off its most recent yearly peak suggests the rally could have legs.
The two big behemoths in the technology arena of course, are the semiconductors and software. Hardware/service names like ROKU and AAPL are important obviously too, but for the most part tech is dominated by the two aforementioned subsectors. For a long time software ruled, but that changed a couple months ago. The baton was passed recently to the semis, and while many thought that was temporary, that may not be the case. The SMH recorded its best weekly CLOSE ever this week and trades just 1% off most recent highs, while the IGV sits 6% off its most recent yearly peak. Give credit to the IGV for recouping both its 50 and 200 day SMAs in the last couple weeks, as it now has a 221 double bottom pivot. Within the semis, the equipment plays remain the firmest with names like KLAC LRCX ASML and AMAT acting well. Keep an eye on LSCC and QCOM in the near term to see if they can climb above the round 20 and 80 numbers respectively, as always on a CLOSING basis.
The group has come into vogue recently, as the XLF is the second best major S&P sector over the last one week period, and the fourth strongest over a one month look back period (on a YTD basis it is just the seventh best out of the 11, but has advanced more than a very respectable 18%). The exchange names have been giving the overall space a boost, and some select insurance names are still hanging strong, although CINF did record a bearish engulfing candle Monday. Interestingly V MA and PYPL all suffered robust declines today, but were made up on the firmness of the traditional banks like C JPM BAC and GS all of which rose between 2-4%.
The discretionary group recorded the worst weekly return this week of the 11 major S&P sectors, falling 4.4%, and easily the XLY's worst weekly loss of 2019 thus far. Of course the 800lb gorilla in the ETF AMZN, at more than 22% of the fund, extended its weekly losing streak to three, with all 3 CLOSING right at the lows for the weekly range. It is on a 7 session losing streak, and volume has been elevated during the 200 handle downturn. Many other names experienced tough weeks, most notably UAA, which fell more than 20%. ETSY slumped almost 16%, and former leaders BBY and FIVE dropped 11.9 and 10.1% respectively. When the retail generals expose weakness, that is a poor sign going forward. TGT undercut its 50 day SMA on 8/1 in bulging volume, and the bullseye is on this space. Keep in mind the consumer makes up 2/3rds of the economy, so perhaps we will look back at this week as a canary in the coal mine.
The semiconductors are getting their mojo back. There is still work to do and we previously mentioned that the space needed a general to guide the group, preferably two or three leaders. XLNX, the prior leader is now higher by more than 11.5% the last 2 weeks, although it is hard to view this as favorable as it still trades 17% off most recent 52 week highs. A more likely candidate is IPHI, however it is grappling with the very round 50 number for the third time since 2017, but it sits just 3% off its most recent peak. There is still time for some future general to make its presence felt, as the ratio chart continues to improve against both software and the Nasdaq.