Monthly Archives: May 2016

Markets gave back early gains Thursday and finished slightly negative. The S&P 500 and Nasdaq were higher by almost .5% early on and the Nasdaq dropped .2% and the S&P 500 ended fractionally lower. Heading into Friday for the week the Nasdaq is lower by 1.2% and looking at a third consecutive weekly decline. The tech rich index has made lower highs and lower lows since the week ending 7/24/15. The S&P 500 is acting "better" down .7% with one session left this week. The Nasdaq is now lower 10 of the last 11 sessions and nearing the 38.2% retracement from the mid April highs after the lows achieved in February. If we fall further than that level where strong uptrends normally find their footing, the ensuing decline could be more meaningful. Something to keep an eye on are the small caps, via the IWM, which fell .4% today and have dropped 2% for the week so far. Sectors that showed some muscle Thursday were energy and staples, with healthcare being the only other group to rise today. Tomorrow we obviously have the employment number which should move markets. If capital flows out of the stock market the bond market will certainly be where that money is parked. Below is the chart of the TLT which is sporting a nice looking double bottom pattern. The 127 handle held firmly on both 3/11 and again on 4/26 and one can enter with a move through a 133.09 trigger. Add to above a long cup with handle pivot of 135.35 in a pattern that began the week ending 1/30/15. That trigger was formed the week ending 2/12/16 which happened to be a bearish shooting star.

Markets were once agin underwater all session but did manage to finish slightly off the lows. The Nasdaq is now lower 9 of the last 10 sessions and is now having memories of the last instance that occurred between the days of 12/30/15 and 1/13. That prior period was much more volatile with the 1/13 day declining 3.4% alone. This recent selloff has lost less than half of the January's roughly 11% decline during the 10 day period. Wednesday the Nasdaq was the softest performer of the big 3, lower by .8% compared to the S&P 500's .6% drop. The very positive action in the utilities, the best acting sector today rising 1.1%, has put a stamp on the risk off feel which has been ongoing for 2 weeks now (the defensive staples group was the only other sector to gain today). The XLU which shied away from the very round 50 number the weeks ending 4/1 and 4/8, as it did dating way back to the week ending 1/30/15, now has the look of a nice cup with handle base and an entry above 49.98 should be purchased. In a world where investors are clamoring for income, the fund sports a juicy dividend yield of 3.3%. WTI fell for a third consecutive session (following last Fridays doji candle) and recorded a bearish MACD crossover and the last time that occurred it went on to 9 day losing streak between 3/22-4/4 which was pulled to its rising 50 day SMA. Volume has been elevated and has accelerated with each session this week thus far. Speaking of defensive play below is the chart of HAIN which we highlighted in our Thursday 4/7 Game Plan and today it recorded its first positive earnings reaction in its last 5.

Markets resumed their recent downtrends after a day off Monday that benefitted from first of the month positive bias. It was the Nasdaq which has been consistently underperforming which lived up to that billing slipping 1.1% giving back all of Mondays advance and then some. The benchmark is now lower 8 of the last 9 sessions and keep in mind AAPL, its largest component, rose nearly 2% today. To its credit some names from the semiconductor group reacted to earnings Tuesday and the reports were well received as IDTI and TSRA jumped 5.2 and 4.5% respectively. Overnight economic data from China was blamed today and that put a bruising on the energy and materials sectors as they declined 2.6 and 3% respectively. Not surprisingly the defensive staples and utilities behaved the best, although they lost ground. Healthcare showed modest "relative strength" down .5% and looking at some recent peers in the group one has to think that the selling will soon continue. Names like HRC, GILD, HOLX, ILMN, XON, UTHR, CAH, LPNT, MOH, PCRX, PRXL, and RMD have all been going through rough sledding as of late. Banks were hit particularly hard Tuesday as the XLF slid 1.3%. So many charts have begun to look promising with recent handles put on current cup bases, but some of growing a little long in the tooth. Speaking of names putting handles on present cup bases below we look at the chart of NVRO which was highlighted in our Tuesday 4/26 Game Plan. Another example of waiting for PRICE confirmation and how stocks in general will have issues with the round numbers.

Markets rang in a new week Monday with solid gains as the benchmarks were on the move higher basically from the word go. The Nasdaq snapped a 7 session losing streak gaining .9% and the S&P 500 was not far behind with advance of .8%. The Nasdaq is hoping to avoid its first 3 week losing streak since the weeks ending 1/1-16 which fell 11%. They are not very common with the one prior to that occurring the weeks ending between 6/26/15-7/10/15 and with both instances the following week was constructive (week ending 7/17/15 jumped 4.2% to hit an all time highs and the week ending 1/22 rose by 2.3%). Sectors that led the way Monday were both consumer related, discretionary and non discretionary both rose more than 1%. Interesting that today the markets were strong as oil was struggled, almost the opposite from last week where benchmarks were soft as crude acted firm. Energy and materials were the only 2 major S&P sectors to decline Monday. It was refreshing to see tech outperform, although we need to see that with a bit more regularity, and software play ANSS and the chart below from our 4/22 Game Plan demonstrates our affinity fro the round numbers. The important 90 figure was taken out on a CLOSING basis by a dime on 4/1, but since reclaiming it on 4/15 it has held rock solid. Five of the last 10 sessions traded underneath 90 on an intraday basis, however all CLOSED above. Now look to add to or initiate above a cup base pivot point of 95.10.