ChartSmarter Monday Game Plan 6/27/16

Markets were torpedoed Friday on a “surprise” outcome across the pond as the Nasdaq was hammered by 4.1% and the S&P 500 slumped by 3.6%. On a YTD basis the S&P 500 is now negative, lower by .3% and the Nasdaq is in correction mode down 10% from recent 52 week highs and off by 6% for 2016. I was dead WRONG in felling the result would be a non event, but clearly investors were caught off guard. Of course hindsight is 20/20, but the seemingly constant rejections at the round 2100 number on the S&P 500 and the outperformance from the staples and utility sectors and gold were sending clear signals. Looking at gold for example the GLD is now higher by 24% YTD, the XLP by 5.2% and the XLU has advanced 16.9% thus far this year. The XLU was strong even during the January swoon, and it has been holding the very round 50 figure well and has acted bullishly since taking out a 16 month cup base trigger of 49.88 on 6/3 that began the week ending 1/30/15. As we discussed in our Thursday Game Plan the ETF could be setting up a very powerful 3 week CLOSING pattern that could lead to a decisive breakout. On Friday it demonstrated good relative strength up .6% and for the week was the only S&P sector to advance. In fact for the second consecutive week it was able to produce that feat. Once again Friday it defended the round 50 number on a CLOSING basis and the last 3 weeks have finished amazingly taut all within just 6 pennies. A move through 51 could produce a forceful movement higher. Remember the directional forecast is not known, and one can see that via the drop the S&P 500 recorded this week following the 3 week period between weeks ending 5/27-6/10, all CLOSING within just 3 handles. Speaking of the round numbers the GLD held the very round par number like concrete last November and December and this is the chart we posted in the opening paragraph way back in our Monday 12/7/15 Game Plan. The ETF is on a current 4 week winning streak up almost 9% in the timeframe. This week it bounced almost exactly off the round 120 number gaining 1.7% in the 3rd strongest weekly volume since the week ending 6/28/13.