Trendlines Held But Earnings Are Coming

It was a very challenging week for Mr. Market as all the major market indexes pulled back.  All the major indexes closed below their 50 day moving averages with the exception of the Russell 2000 which managed to hang on.
The biotech etf (IBB) was the big culprit last week and weighed heavily in the Nasdaq.  IBB surged 2.0% on Friday, but still ended the week lower by 5.2%. Friday, however, the bio sector did some heavy lifting and contributed to the outperformance of the Nasdaq even as large cap technology names struggled.
At one point on Thursday, the IBB was down almost 8.5% from the intraday highs registered the prior Friday. That’s what I call a pullback. The energy sector ended the day at the bottom of the barrel, but still finished the week ahead of the remaining cyclical sectors (-0.7%).
 Crude oil factored into Friday’s weakness as the energy component fell 5.0% to $48.87/bbl and continued its retreat during electronic trading. Despite the plunge, WTI crude gained 4.9% for the week.
Also of note, the financial sector (-0.1%) finished with a slim loss Friday, but ended the week behind the remaining nine sectors with a 3.0% loss.
I’m expecting a very strong April for the market.  Some of my opinion is based on strong seasonal factors and the fact that we are getting to oversold levels.
Janet Yellen, in a late interview on Friday waxed dovishly and it seems that perhaps a rate increase may now be moving from a June increase to perhaps September. If this is the case and grows then expect a powerful rally shortly.
The good news so far is that the DOW, Russell and Nasadq all held uptrend line support last week. The S&P closed just under.
We did a fair amount of selling in recent weeks as you guys know and we locked in some massive profits over the past few weeks, although we did see several stops on some remaining positions later in the week.
I’m not convinced at all that biotech “is done”.  Far from it actually. The sector experienced a sold pullback last week, it was overdue and very necessary for prices to resume higher once again. Notice how it held the 50 day moving average AND trend line support (green arrow) in the link below.
Earnings are not expected to be good by any stretch and reports start in two weeks.  The market may have already discounted this possibility, hence the recent weakness.
Right now futures are flat.
I will have full video with setups at some point tomorrow.  See you in the morning.
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