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ChartSmarter Monday Game Plan 8/20/18


Markets: For a third consecutive session the Nasdaq lagged, as the tech heavy benchmark rose just .1%. It did CLOSE off intraday lows, and bounced off 50 day SMA support for the second time in the last 3 days. We touched on FB yesterday and its weekly chart looks ugly with double digit losses of 13.9 and 16.7% the weeks ending 3/23 and 7/27, both in the largest weekly volume in over 4 years. NFLX, lower everyday this week, is now lower by 25% off most recent 52 week highs. AAPL on the other hand is at all time highs, and GOOGL today filled in a gap from the 7/23 session, and in the process retested an 8 month cup base breakout trigger that aligned with the round 1200 figure. And some still say stock picking is dead.  On a weekly basis it was the Dow showing muscle adding 1.4%, the S&P 500 and Russell 2000 rose .6 and .4%, and the Nasdaq FELL .3%. The semiconductors have been a big reason with the SMH in correction mode down 10%, compare that to software lower by 4% from most recent 52 week highs. Growth has been leading value for 10 years now, and is a big trend change upon us? I still think there is too much chatter about it, but the move is nascent so the legs are fresh and could have more room to run. The VIX gave a brief thrill after this week, but CLOSED below both its 50 and 200 day SMAs Friday. Remember it registered a bullish weekly hammer candle off the very round 10 number the week ending 8/10. Sectors: The staples were firm Friday rising .8%, and it was the second straight day it was the best major S&P sector performer (on Wednesday it was the second best actor). The materials, industrials and utilities rounded out the top four best groups. Lagging, but still finishing in the green, were technology and the cyclicals which both advanced in the .1% neighborhood. Looking at the XLK chart, volume trends have been suspect, with just 6 accumulation days since early February. Give the ETF credit for trading just 1% off most recent 52 week highs and enjoying the comforts on rising 50 day SMA support. On a weekly basis it was easy to spot the winners as again the staples were the best performers as the XLP jumped 3.3%, its third best weekly gain of the year behind 3.5% advances the weeks ending 2/16 and 3/30. The utilities were the second best weekly gainer as the XLU rose by 2.8%. The move into defensive natured spaces is nothing new, although, the talk about them is incessant. The utilities on a 3 and 6 month basis has been the strongest major S&P sector, and on a one month look it has been led by the healthcare arena with the XLV up 4.3%, followed up by the utilities and staples. I may be wrong here, but I believe that the Barron's Roundtable at the beginning of the year talking to the investment "gurus", showed almost everyone mentioned to avoid these areas. Special Situations: The chemicals group has not been one discussed much, and that could lead to some undiscovered possible gems. To be clear I like to buy strength, but there will be some set ups that prove to be potentially very worthwhile. One scenario could be the chart of ALB below and here is how it was profiled in our Tuesday 8/14 Game Plan. This was a former best of breed play that now rests 34% off most recent 52 week highs. It could be building the right side of a long cup base that began last November near the round 140 number. Since the first week of March it has encountered problems CLOSING above the very round par number, doing so just three times. Looking on a shorter time frame it has held the important round 90 number well and filled in a gap on 8/15 from the 8/7 session.

ChartSmarter Friday Game Plan 8/17/18


Markets: The Dow's best performer Thursday, was also its highest priced, BA, giving the index a nice boost as it rose by more than 4%. It showed wonderful follow through after Wednesday bullish hammer off its rising 50 day SMA and the very round 25000 figure. All but three names in the benchmark fell today, and it was CVX, DIS, MSFT and INTC which fell ever so fractionally. Top to bottom it has gained 600 handles the last 2 sessions and that type of volatility can be considered bearish, as wide and loose trade is not preferred compared to taut and tight action. But one has to give credit where it is due as the futures were firm early on, and the markets not only refused to relinquish them but added throughout the day. The Nasdaq was somewhat heavy Thursday as the index rose just .4%, half of that of the S&P 500 and Russell 2000 which rose by .8 and .9%. That was even with AAPL, the supertanker, hitting all time highs and the stock has lost ground just 2 days in August thus far. The bearish engulfing candle from 8/7 is now in the rear view mirror. Looking back it was recorded on weak volume and that day was down less than 1%, nothing to be alarmed about. On a weekly basis, so far heading into Friday it has fell .4%, as the S&P 500 is up by .2% and the Dow has achieved a nice 1% gain. Looking outside the box the weakness in some recent IPOs should be monitored. Some conclude the amount of new issues could mark a top, I am not one of them, but CWK and SONO are down this week by 2.9 and 6.2%.  Sectors: Leadership was somewhat suspect with the staples leading the way as the XLP rose by 1.5% Thursday, and the utilities were among the top 4 of the major S&P major sectors as well. I did have a conversation with someone today trying to convince me that the staples can be looked at, in a small way, as technology with all the innovations in the space. I am not buying it, but one would be foolish to deny the ETFs PRICE action. One could make the case for a cup with handle breakout, but the handle did not form in the upper half of the base which makes it failure prone. WMT, the fourth largest component in the fund did skew the return today, but PG the largest weighting in the ETF is looking for its 12th weekly gain in the last 15. Lagging today were groups that have carried the load recently with the cyclicals and technology, still higher but displaying poor relative strength as the XLY and XLK rose by .5 and .4% respectively. FB sure did not help the technology group as it is back in bear market mode, 20% off most recent 52 weeks highs, and the fact that it undercut its 200 day SMA so quickly after recouping it is certainly concerning. Other "old tech" plays, besides CSCO which ramped up 3%, like AMD and MU were RED on the day. AMD is doing battle with round number theory at the 20 figure, managing just one CLOSE above in 2018 on Tuesday by 2 pennies. MU is now off by 27% from most recent 52 week highs as the round 50 figure was pierced on Wednesday which doubled as 200 day SMA support too. As the saying goes nothing good happens underneath the 200 day, so a rapid recapture of that line is essential for the name.  Special Situations: Retail names have been having some big moves on earnings, some good and some bad. Of course WMT comes to mind today with a huge move for the behemoth up more than 9%, and was stopped by the very round par figure. That is probably temporary as it carves out the right side of a cup base pattern with a potential trigger of 110.08. On the flip side there was M which cratered 16% on Wednesday, a day after breaking above a bullish ascending triangle. Below is the chart of FL and how it was profiled in our Wednesday 8/1 Game Plan, and it REPORTS next Friday before the open. It still trades 16% off most recent 52 week highs and filled in a gap that was also a retest of a bullish inverse head and shoulders formation with a downward sloping neckline. It is setting up a double bottom pattern with a potential trigger just of 53.57, and one could enter now above its rising 50 day SMA.

ChartSmarter Thursday Game Plan 8/16/18


Markets: The major benchmarks fell Wednesday but did bounce, and did so at key moving averages. The Nasdaq kissed it upward sloping 50 day SMA precisely, like it did in both June and July. The tech heavy index did spend four sessions feeling if the retest of the important line was for real before resuming its powerful uptrend the last couple months. Time will tell if that happens once again. The S&P 500 did not come into contact with its 50 day but did register a bullish hammer candle within just 2 handles of the meaningful round number. Advantage bulls, as the break point the bears were given today was unable to be capitalized upon. The S&P 500 is looking at a possible back to back weekly decline, and it is still very premature but the index has not recorded a three week losing streak in near 26 months. The Russell 2000 is now back below its 50 day SMA, which has been a rare occurrence since early April. There is a real tug of war continuing at the very round 1700 number with no weekly CLOSES above the level, with FOUR of the last eight trading above intraweek. Gold which many believe should be thriving in this type of uncertain environment lost 1.6% Wednesday and is looking like a sixth consecutive weekly decline is likely as the GLD is off by 3% heading into Thursday. The ETF is 14% off most recent 52 week highs, and has not registered an accumulation week since the week ending 2/6. Sectors: Utilities and staples were the winners today as the XLU and XLP advanced by .8 and .4% respectively. The XLU is up by 1.3% this week so far, and 7 of the last 9 weeks the ETF CLOSED in the upper half of its weekly range (the only weeks it did not lost a very pedestrian .5 and .6% the weeks ending 7/20 and 8/10). Healthcare was the third best actor among the major S&P sectors and the XLV fell by .2%. Today completed another handle on a cup base with a potential trigger of 90.48. The 3 week tight pattern looks likely as the last 2 CLOSED within just .18 of each other and this week so far is within that range. Lagging in a very sizable manner Wednesday was energy as the XLE slumped more than 3%. That was due to three of the four largest components losing between 4-6%. EOG which makes up nearly 5% of the ETF, cratered more than 6% after a 128.06 cup with handle breakout lasted just 5 sessions. Breakouts that crumble that rapidly are a very bearish sign and it is now in correction territory 12% off most recent 52 week highs. CVX the second largest component slipped almost 4% and undercut its 200 day SMA for the first time in 4 months. Special Situations: On sessions like Wednesday it always pays to search for names that shrugged off the weakness. Below is the chart of SCI and how it appeared in our Wednesday Game Plan this week. It emanates from a dreary funeral business, but it is one that is constantly in need. These types of defensive plays have come into vogue recently, but this name has been acting well on a current 6 week winning streak and most likely will make that 7 as it has advanced 3.3% this week headed into Thursday. SCI also brings round number theory into play as the 40 figure was resistance the two weeks ending between 1/26-2/2. During that time span it managed just one CLOSE above 40 on 2/1, but after today it has finished FOUR straight days above the number. It recorded a break above a 6 month cup base trigger of 40.38 on 8/13, and the move looks far from dead, pun intended.

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.
Dan Shapiro,
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.
Andrew S