The broad market indexes stumbled through the the, but did manage to end the week up and it did so without profit taking. This has been a week where the cards all fell into place and the would be worries seemed to disappear. The S&P 500 index closed up 1.6% for the week and the NASDAQ index gained 1.65% as well. The chart below is the scatter graph for the S&P 500 index showing the leadership since the August 7th low.
As you can see the industrials (XLI), healthcare (XLV), consumer services (XLY) and utilities (XLU) were the leaders on the upside. I would call that eclectic in nature, but it got the job done. Financials (XLF) and technology (XLK) are in a position to provide some leadership with a follow through from investors next week. The biggest disappointment on the week came from the energy sector (XLE) as you can see the selling on Friday.
If you look at a chart of XLE you see the failed attempt to break through resistance at the $97.70 level. Volume was on the upside Friday versus the buying on the previous five days. Crude oil continues to put pressure on the sector closing at $93.60. This is the second move below the $94 support level and we continue to watch how the impact will unfold, but the pressure is on for the near term outlook. All of the subsectors look similar in nature as the pressure builds relative to the downside risk.
The chart below is of the seven asset classes and how they have moved since the same low on August the 7th in comparison to the US stock market. Emerging markets were outperforming the US, but the last three days has been giving back some of the gains. Not enough to run or exit the positions in the sector. REITs experienced some profit taking on Friday, but still remains in a very positive trend. Europe helped the EAFE along with Japan hold a positive drift higher and the commodities are still in the cellar with no signs of recovery near term. Gold is struggling after selling lower n the week, natural gas struggled to hold near support, base metals moved higher barely, and crude is struggling to hold support. There is still plenty of challenges that show in this chart with the sideways to higher movement, but little in terms of confidence. Patience remains the key buzzword.
Don’t forget the updates will be posted on Sunday for the outlook of the upcoming trading week. Plenty to scan and view as the market stalls near resistance on the move higher. We will look a the data and the charts to define what looks like opportunities and where stops need to be tightened. Have a great weekend and see you on Monday.
Don’t FORGET we are doing a Webinar on Monday on “PicturesDon’t Lie!” Finding and trading the trend is the topic. We will spend 30 minutes reviewing the current trends and what trades are in play and which are setting up. This is a educational view of using trendlines as a trading strategy. I will put up another article this weekend in follow up to our last one published on trends as a help in understanding the presentation on Monday afternoon. SEE YOU THERE!