A Choppy Week Means Less Action | AAPL, COST, PG, XHB

After hitting AAPL and PFE on Monday, we're content to be defensive this week.

We came into Monday’s open excited to see what the week could bring us. That was after the inside week (and high close) on the Nasdaq and as the S&P 500 finished with a weekly-up rotation. 

Monday’s action was disappointing for the bulls. There’s no other way to put it. 

That said, I am quite content with how we maneuvered the day with our game plan. 

We were cautious on Apple, a stock that gapped up and gave us a bearish reversal, resulting in a 2.1% decline on the day. How many people came into the day cautious on Apple? Pfizer also paid off well, gapping higher and climbing 4.6% on the day. 

This is not some lame horn-tooting, but a reminder that proper game-planning without a bias can lead to less stress during the day. 

The Game Plan

We’re not going to go crazy here. Yesterday I wrote that it’s Quad Witch expiration this week, combined with a two-day Fed meeting (announcement due up on Wednesday). Why do something stupid and get chopped up in this pre-holiday mess until we have some clarity? 

We have been watching The Homebuilders ETF (XHB) all month and now it’s giving bulls a nice little dip. Let’s see if it gets bought. 

P&G has been on fire and may be a buy-the-dip candidate, while COST gave us an inside day just below $560 resistance. Can it break out in the days ahead? It’s something to watch. 

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Technical Breakdown 

• NYSE Breadth: 78.3% downside volume

• NASDAQ Breadth: 63.6% downside volume

S&P 500

Yesterday I said that I wanted to see the S&P 500 hold the prior week’s high near 4672. It finished near that mark on Monday. If it holds, we’ll have to see how the SPX handles the 4700 area.

If it doesn’t, the 4650 area will be critical, which is where the index finds its 10-day and 21-day moving averages. 

Not a lot has changed in the outlook despite Monday’s action. 

Nasdaq

Yesterday we said a break of 15,500 would put the 50-day moving average in play, followed by the gap-fill at 15,280. 

So far we have (essentially) tested the 50-day. If holds, let’s see if the Nasdaq can reclaim its short-term moving averages. Below the 50-day and the 15,280 level could be in play. 

Like the ES, not a lot of changes here. 

Individual Stocks & ARKK

As I said at the top, I couldn’t have been much happier with how yesterday’s individual stocks played out. If Apple continues to roll over from the bearish reversal, let’s see if it finds some support near the 10-day moving average. 

As for the XHB, PG and COST, here are the accompanying setups.