ChartSmarter Wednesday Game Plan 10/29/14

Markets went out on highs Tuesday as the impressive bounce continues, classic bull market behavior. Volume was elevated to boot. The Nasdaq enjoyed the best move with gains of 1.7% and the S&P 500 advancing 1.2%. The Nasdaq has now climbed almost 450 handles off its lows on 10/15 and the chart has a V shaped base, which tend to be failure prone. That being said it exploded past both perceived 50 and 200 day SMA resistance. The very round 4600 handle which was difficult to CLOSE above in September, as it traded intraday above that level 4 times, is the next test for the benchmark. The S&P 500 reclaimed its 50 day SMA Tuesday. Energy was the best performing sector today up better than 2%. Many names in the group remain broken but the question many are asking if the underlying commodity nearing a bottom. Is it overall weakness a supply or demand issue? Can it be forecasting a weak economy? Some surprising names that have recently reported earnings may have shed some light on the topic. CAT released numbers on 10/23 and it was well received jumping 5% on the second heaviest daily volume of 2014, trailing only its first earnings report of the year on 1/27 rising almost 6%. Tuesday it eclipsed one of the roundest numbers of all, par and in the process took out both its 50 and 200 day SMAs. TSCO is another name with its pulse on the genuine health of the economy and that name has gained almost 20% the last 4 sessions since reporting on 10/23.