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Markets declined in the final hour Friday leaving the indexes slightly lower heading into the holiday weekend. The S&P 500 dropped .2% and the Nasdaq was UNCH. For the week the Nasdaq gained .8% and the S&P 500 by .2%. Gains here at home were dwarfed by overseas moves of 8% for China, 4% for Japan and 3% for moves on the DAX and CAC 40. On Friday although the selling was muted all 10 major S&P 500 groups were lower. Health care and consumer staples were the worst performers. Sectors in the news once again were the transports. The airlines were hit and the fourth week of trading for the new exchange traded pure play fund, JETS, saw it lose altitude to the tune of more than 7% in bulging trade. The IYT more concentrated on rail names, but which does include others in the trucking group, etc. lost 2.2% in the largest weekly volume in the last 7 months. Names like NSC are nearing the bear market threshold lower by 19% from recent all time highs. That particular name fell below a long descending triangle pattern whose lower horizontal line aligned roughly with the round par figure. As certain groups fail, others spring back to life and it seems the biotechs are on the ascent. The IBB is on a 7 day winning streak and higher 13 of the last 16 sessions and is now sniffing out a double bottom trigger of 368.35. GILD, the funds largest component, has been responsible for a good deal of the gains as it has risen 4 of the last 5 weeks. Volume has not been supportive of the move but the price action has been hard to dismiss.
Markets eked out small gains Thursday as the Nasdaq rose .4% and the S&P 500 by .2%. For the week heading into Friday the Nasdaq is higher by .85% and the S&P 500 by .4%. The S&P 500 is looking to CLOSE for a fifth consecutive week at highs for the intraweek range, a bullish sign. It has also traded in a very tight range Monday through Thursday with all closes within 11 handles of each other. Sectors that were among the best today included risk on groups like energy and industrials. Both are important to a healthy economy. Looking at some energy ETFs the XOP looks intriguing here as it has made higher highs and higher lows since the beginning of January. This week it has also received support at the very round 50 handle. The fund has been up just 5 sessions in all of May and seems like the masses are betting against a crude advance. Markets have and always will look to confound the most and it will be interesting to see how this particular scenario plays out going forward. More earnings reports continue to come in to feel the enthusiasm of the consumer and they are mixed. Two of the more dynamic moves Thursday came from KIRK and BKE. KIRK which we profiled in our Tuesday 4/21 Game Plan (chart below) took out a 26.89 cup base trigger with a third consecutive powerful beat. It rose 9.1% today and 8.3 and 24.5% on 2/5 and 11/20. BKE demonstrated capitulation like move today as it mounted a serious reversal near the round 40 handle which has been pivotal area of both support and resistance dating back to May 2011.
Markets traded in a tight range near the UNCH mark between 11-2 Wednesday then saw a brief move higher before the high wore off with benchmarks finishing little changed. The Nasdaq recorded a doji candle today with its intraday high near the round 5100 figure and highs made back on 4/27 which produced a bearish engulfing pattern. A doji candle is one that suggest strength in the preceding direction could be waning. The index is also nearing the top of the upper Bollinger Band which occurred in mid March and early April which led to declines of 200 handles each time. Action in the meaningful transport sector was ugly today. The IYT derailed almost 2%, pun intended, Wednesday in the most active volume of the year. The airlines were the culprit today, although both rail plays to the north, CP and CNI are now in bear market mode down more than 20% from recent 52 week highs. Getting back to the airlines names AAL, UAL and LUV are all now below their 200 day SMAs and in bear market mode as well. Perhaps the recently introduced airline ETF, with the clever symbol JETS, called the top in some of these plays. As the markets try and decide which way they want to go, the utilities which were the best performing sector Wednesday, are basing and the XLU looks like its rounding out a nice bottom. The ETF is on a 5 day winning streak, its third of its kind in 2015 with two 6 day winning streaks this year on 1/13-21 and 3/27-4/6. Maybe they are ready to wake up from a long sideways hibernation spooning the 200 day SMA.
What Readers Say
Amazing work in this piece. Truly inspirational! You gotta keep this up. Good luck next week.
On Monday I played 3 of your alerts: JACK = $110, AVD = $600, and SPW = $700. Today I played 2 more of your alerts: ALL = $300 and WYN = $280. THANK YOU!
I know Doug from the Carlin days in 1999. He’s the hardest working technical trader out there and shows no bias in his analysis. A must read in any market.
Some great setups in @chartsmarter’s service tonight. Do yourself a favor and take it for a test drive. You will be glad you did.