ChartSmarter Wednesday Game Plan 5/20/15

Markets declined in the final hour of trading to finish near their lows with little damage. The Nasdaq fell by .2% and the S&P 500 by .1%. The S&P 500 still remains above its 2120 ascending triangle breakout trigger but its advance has been fairly muted. Of course it is just one session old, but the following days will provide valuable clues. Remember the best breakout tend to work out fright from the get go, so one would expect it to gain stream or be in jeopardy of it petering out. Tuesday healthcare was the best performing sector and a peek at the XLV shows it took out a double bottom trigger of 74.92 but volume was frail, continuing a declining trend throughout May (it is somewhat unorthodox double bottom as left hand low of 71.31 on 4/1 did not undercut 71.33 made on 4/30). Some more evidence of a possible weakening consumer came way of an earnings report not well received from URBN which cratered 15%. Peers DKS and WMT both dropped by 5.1 and 4.3% as well. HD reversed after an earnings report recording a bearish engulfing pattern a day after reclaiming its 50 day SMA. The 6% fall the 4 days between 4/27-30 was a canary in the coal mine moment and should have been a warning that a move back above the 50 day line was going to be a struggle. As we continue to lean bearish on the market the tape remains strong. Some further evidence that should be construed as bullish was a note this morning from BAC in which I am quoting”the shift in exposure marks the single biggest monthly drop in fund manager allocation since September 2009, the bank said, with overweight cash positions rising sharply.” Bull runs will normally decay with excessive optimism, exactly the opposite which was expressed in the prior sentence.