Markets looked a little better than they felt Tuesday as the S&P 500 and Nasdaq rose by .2%, not that respectable of a showing following Mondays drop of .6% for the Nasdaq and .4% for the S&P 500. Keep in mind both of the aforementioned indexes recorded bearish engulfing candles at all time highs. The Russell 2000 also registered an engulfing candle Monday and it is still sticking to the round 1500 figure like glue. Bulls can say the longer it stays at this altitude the more it demonstrates the inability of the bears to push it lower, but at the same time flags want to broken away from in a somewhat tidy fashion. The Dow continues to have the better complexion as the price weighted benchmark has been helped by its higher priced names. Today that came courtesy of MMM which catapulted higher by almost 6% after earnings and is one of four names over the round 200 number. Will BA compliment the Dow the same way tomorrow when it reports before the bell? Three of its last four earnings reactions were well received gaining 9.9, 4.2 and 4.7% on 7/26, 1/25 and 10/26/16.
Looking at individual sectors there was certainly a risk on feeling as the most defensive groups lagged with the utilities, staples and healthcare groups the only major S&P sectors ending the day in the red (utilities ended up late by 3 pennies). The XLV has the hardest hit as it surrendered .7% as the group was weakened by the likes of BIIB, NVS and LLY all dropping 3.9, 3.2 and 2.3% respectively and IONS slumping more than 12%. Financials, industrials and materials all led the way as each rose by .6-7%. FCX put up an earnings reaction that was cheered to the tune of nearly 3% and copper has been garnering a lot of attention as it recently retested a good looking cup base breakout trigger of 36.19 on 10/16 jumping 3.7%, its third best daily gain of ’17 so far. The ETF is not very liquid but its chart has been battle tested as it also recorded a 5 1/2 month cup base breakout trigger of 32.49. That base began the week of 2/17 and was taken out the week ending 7/28/17 adding 6.2%, and was also successfully retested the last week of September.
Consumers are still electing to spend their money on retail through experiences. One can argue some retail pure retail plays have put up some solid results with VFC for one now on a 7 session winning streak and adding almost 2% Tuesday, following a 5.4% jump after earnings yesterday. Below is a chart of PII and how we portrayed the stock in our Monday 10/9 Game Plan and this illustrates how individuals are gravitating toward purchases that will produce satisfaction. To be fair the 102.50 trigger was missed by .11 on both 10/16-17, but todays move drives home what we are trying to coney. The stock flew above a 108.55 cup base trigger rising more than 15% hitting highs not seen in two years. One has to wonder if the economy is a bit stronger than people want to admit as snowmobiles and the like are flying off the shelves. Or are people just feeling more sanguine about the future?