ChartSmarter Monday Game Plan 8/29/16

Markets reversed Friday and early on it looked like the Nasdaq was potentially going to continue its weekly winning streak to 9. It did eke out a small gain of .1% thanks to a mild late afternoon really but for the week dropped .4% (the last 4 weeks have all CLOSED taut within just 20 handles of each other). The S&P 500 fell .7% for the week and that stat may be a bit more ominous as it slipped below a 3 week tight pattern with the 3 weeks ending between 8/5-19 finishing less than 1.5 handles from each other. A break above would have been very positive. Overall not much has changed with this week, but bulls would like to see a forceful move higher soon, as one could consider recent action stalling. Perhaps Fridays action was a bear trap, and we will know shortly. Although the weekly market moves may have look subdued there was plenty of action going on underneath the surface. Just 2 of the major S&P sectors gained ground and the best performer were the financials with the XLF up .4%. The only other group to gain this week was technology with the XLK higher fractionally by 3 pennies. The last 4 weeks have witnessed the ETF ending the last 4 weeks all with just 9 pennies of each other. Fridays action on the XLK did produce a bearish spinning top candle following a recent strong run. The bottom 4 groups for the week all lost more than 1% with the utilities falling the mist with the XLU surrendering 2.2%. The ETF has now fallen 5 of the last 7 weeks and this week CLOSED below the very round 50 number for the first time since the week ending 6/3. Rounding out the bottom 4 were the staples, energy and healthcare with the XLP, XLE and XLV all losing 1.1, 1.5 and 1.7% respectively. A good example of why I talk about CLOSING prices incessantly is KSU. Intraday it broke above a good looking bullish inverse head and shoulders pattern and the very round par number only to fail by 4pm. Sure that can resolve itself to the upside next week but Fridays action was concerning. Below is the chart detailing the strategy. Glancing at the IYT it did register a nice breakout above a double bottom trigger of 143.10 on 7/14. The breakout lasted just 2 sessions and that type of behavior so soon after a breakout is troublesome. For the bulls the weekly chart shows a symmetrical triangle pattern. Should be an interesting week as August comes to a close.