Douglas Busch

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ChartSmarter Friday Game Plan 2/24/17

Markets were slightly bifurcated Thursday as the Nasdaq and Russell 2000, your more aggressive benchmarks underperformed. The Nasdaq dropped .4% and the Russell 2000 by .7% today and the S&P 500 rose fractionally. As we spoke about this week the Russell 2000 did break above a cup base trigger and the best breakout tend to work out right away and power ahead. It is retesting it at the moment and if it falls below could be a big negative. On a weekly basis the averages are showing differing action as well as the S&P 500 is higher by .5% for the week headed into Friday and the Nasdaq is lower by .1%. More concerning is the leadership which we have been witnessing as it was the utility and staples play that have shined today once again with the XLU rising more than 1%. Is it sector rotation? It is a bit to early to tell but some affirmative signs have emerged and the XLU and XLP are clearly the best two sectors on a weekly basis with the XLU up 2.6 and XLP higher by 1.7%. Healthcare continues to act well and I continue to keep an eye on former leaders that were perhaps unduly punished in the recent malaise. One that fits the description is OSUR and below is the chart and how it was presented in our Tuesday Game Plan. I recall this particular name was going to be all the rage as they had an interesting device for couples on first dates that could breathe into it and determine in extremely rapid fashion whether one or other dates had HIV. That is now well in the companies past.

ChartSmarter Thursday Game Plan 2/23/17

Markets were once again very quiet Wednesday as the Nasdaq and S&P 500 were little changed and the Russell 2000 was the weak link off by .5%, but the small cap benchmark is holding the round 1400 number and a cup base trigger about 1% below well (it did bounce nicely off the zero line on the MACD too). The Nasdaq did record a bearish harami, but candles have been much better at forecasting bottoms than tops however (for example look at the doji candle on 2/7 and the spinning top on 2/16 which the index shrugged off), and is now nearly 300 handles above its upward sloping 50 day SMA. The S&P 500 is now 4% above its 50 day SMA so a pullback may be prudent here as well, or the indexes may just keep grinding higher, climbing the wall of worry. A common theme is catching on as it was the utilities leading the way, as the XLU cleared the very round 50 number Tuesday and followed through nicely today. The ETF is looking for its first 4 week winning streak this week and if achieved would be its first in 11 months. Energy acted with anything but, as the XLE fell 1.5%, and highlighting that things in motion in a certain direction tend to stay that way. The XLE is looking potentially at a fifth consecutive weekly decline which would be its first since it was ensnarled in a nasty downward spiral declining 13 of 14 weeks ending between 5/8-8/7/15. Talking about sectors in the news the retail group has suddenly found some affection, perhaps because of possible merger talk, think KATE, or just that sentiment had become overwhelmingly negative. The conundrum is whether this is the beginning of something real or is it just a temporary dead cat bounce? Below is the chart of TLRD and how it appeared in our Monday 2/13 Game Plan. Perhaps this turnaround is for real as it put up two very strong earnings reports together recently.

ChartSmarter Wednesday Game Plan 2/22/17

Markets began the week positively as holiday shortened weeks tend to be bullish. Technology "lagged" slightly as the Nasdaq rose by .5% and the S&P 500 and Russell 2000 rose by .6 and .75% respectively. Earnings came in from some big retailers and they were well received for the most part with WMT and HD advancing 3 and 1.4%. Seems like investors were caught off guard with WMT as it beat and narrowly missed trading above a double bottom trigger of 72.58. It did break above its 200 day SMA and is looking for its first 4 week winning streak since last June, to emphasize how tough the road has been for the stock in general. Looking at the top of the leaderboard among individual sectors one could question the sectors as they were led by energy, utilities and staples (MDLZ jumped nearly 6% recapturing most of last Thursday and Fridays losses after it was shunned by KHC). Talking about defensive names they do not get more specific than with alcohol names. Below is the chart of TAP and how it appeared in our Tuesday Game Plan this week. Notice how the very round par figure has been influential since last November and one can make the case that former stern resistance may not be turning into support.

ChartSmarter Tuesday Game Plan 2/21/17

Markets put in another powerful week with the Nasdaq rising 1.8% and the S&P 500 by 1.5%. Each of these indexes have now CLOSED at their highs for the weekly ranges the last 7 weeks.The Nasdaq has risen 6 of the last 7 weeks (and the tech rich benchmark has now advanced 7 consecutive Fridays) and the S&P 500 has added ground 5 of the last 7, with the 2 down weeks falling by a COMBINED .25%. The naysayers are growing louder by the moment and a best friend of mine who is not a close market participant texted me mid week to say the market was on fore and my brother followed one up with the same sentiment on Thursday, so perhaps we are getting a bit long in the tooth. But of course price action is another animal and that is moving forward ant a smooth and steady clip, exactly what bulls would want to see. Looking at how individual sectors performed on a weekly basis, it was led by financials and healthcare which both rose by 2.9 and 2.5% respectively (energy was a clear laggard off by 1.8% and sentiment in that particular group is beginning to feel very heavy). The XLE is lower now 8 of the last 10 weeks, yet lower by just 8% off most recent 52 week highs. Technology has been grabbing the spotlight and continues to as the Nasdaq is at all time highs and the XLK is on a current 11 session winning streak. The sub sector that has been doing most of the heavy lifting are the semiconductors. The SMH is higher 26 of the last 34 weeks and this weeks move could be interpreted as a 3 week tight breakout as they prior three all CLOSED within just .51 of each other. All the noise has been centered on NVDA, but that stock may have put in a double top at the round 120 number and is off a quick 11% from recent all time highs, including a bearish gravestone doji week ending 2/10. The creme of the crop may now be handed over to Broadcom as AVGO as that name is right at all time highs and this week took out a 3 week tight trigger of its own as the last three all CLOSED within .64 of each other. Retail names have started to look like they may be breaking from their recent malaise and a recent IPO that is certainly worth keeping an eye on is ELF. Below is how we presented the newly minted IPO in our Tuesday 2/14 Game Plan. Many individual names that will be reporting this week include HD M JWN JCP WMT KSS GPS and FL.

ChartSmarter Tuesday Game Plan 2/14/17

Markets started the week in fine fashion as the averages posted decent gains. The Nasdaq and S&P 500 rose by .5%, but curiously it was the Russell 2000 that lagged higher by just .2%. We spoke about how it was potentially headed for a test of all time highs after being pushed back at the 1390 area three time recently this year. Today the index recorded a bearish shooting star candle which was stopped right at the round 1400 figure. Now of course the Dow hesitated at the very round 20000 number before bursting through, and we know that candlesticks in my experience tend to call bottoms much better than tops so it will be very interesting to monitor how it fares the rest of this week (notice the last 2 weeks recorded bullish hammer candles). It was the financials that led the way Monday with the XLF advancing by 1.1%, followed by the industrial, material and healthcare sectors. Below is the chart of finnie AMP and how it was presented in our Wednesday 2/8 Game Plan (notice the bearish shooting star it registered on 2/2 yet the stock has risen by a combined 4% the last 3 sessions). The staples were the laggards, but the XLP is still bullishly carving out the right side of a cup base just 2 handles above after recently finding nice support at the very round 50 figure last November and December. Earnings will be trickling in this week once again and tonight we see the reports from two solid energy names, DVN and FANG. Perhaps they can ignite some momentum in the group. REITs acted well Monday with the XLRE off to a good start this week jumping .5% and the ETF is looking for a third consecutive 1% weekly gain. Today it pushed its head above its 200 day SMA and it has recorded tow bullish engulfing candles this month already on the second and ninth. The fund found nice support at the zero line on the MACD recording a bullish MACD crossover after zero was resistance twice last September. Former resistance becomes support.