Tom Bowley | April 07, 2016 at 09:00 AM
Market Recap for Wednesday, April 6, 2016
Healthcare (XLV) and energy (XLE) had huge days on Wednesday as our major indices rose throughout the day and finished on its high. Strength was seen across nearly every sector with only the defensive utilities down slightly. The best performing aggressive sector - technology (XLK) - rose .98% and ranked the XLK fourth in sector performance on the session. The hesitation of money to rotate toward aggressive areas of the market remains a key factor in my current cautious approach to trading. I discuss this in greater detail in the Current Outlook section below.
Despite the huge 2.69% gain in the XLV, there remain significant challenges ahead for the group, particularly on the longer-term weekly chart. Check it out:
The XLV closed at 70.31, but there are two obvious reasons that healthcare could struggle in the 70-71 area. First, there's a down channel in play off the July 2015 highs. Remember those weekly negative divergences that warned us of trouble ahead? Here was my June 2015 article that discussed the potential troubles that healthcare faced at the time.Also, the selling really began in 2016 from the current level. The entire stock market was extremely weak in January and the XLV was no exception. Now we've rallied back to that level. Finally, the 50 week SMA currently resides at 70.42. It seems unlikely we'll simply go blasting through, but we'll see.
Energy's strength resulted from the bounce in crude oil prices ($WTIC) as the price of crude rose 3.20% and for a second consecutive session, ending the two week decline from $42 per barrel to $36.
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