Douglas Busch

About Douglas Busch

This author has not yet filled in any details.
So far Douglas Busch has created 2078 blog entries.

ChartSmarter Thursday Game Plan

Markets were somewhat bifurcated Wednesday as the Dow lagged off .9%, which is kind of misleading as 27 of 30 of its stocks were lower. The S&P 500 fell .5% and the Nasdaq by .4%. Interestingly enough it was the Russell 2000 that was HIGHER by .2% as it CLOSED above its 50 day SMA for a second straight session. Remember the index is a leading indicator and shows investors have an affinity for risk appetite, but I wonder if people want to be a bit more domesticated and put their capital to work in stocks that have nearly all their revenue derived here in the US. Another head scratcher was the VIX which fell today as the big three obviously did as well. One would think the threat of missile attacks would have sent this instrument higher in a meaningful way, but to its credit it still CLOSED above the very round 20 figure after being underneath it intraday. The markets continue to confound the most as they always have and will continue to do so.

Looking at individual sectors it was the energy group that shined Wednesday as it was the XLE which was the only major S&P group to gain ground rising 1%. I am not a conspiracy theorist in the least bit, but perhaps this space broke out recently as it was aware of impending conflict in the Middle East. If it did breakout on that I would be somewhat skeptical of the move, since I like to see boring, generic, non related news events move markets. That being said the price action is impressive as heading into Thursday the ETF is higher by 4.8%, and if that holds would be its best weekly gain since the 5.5% jump the week ending 4/22/16. Rounding out the top three were the usual defensive areas as the staples and utilities fell by .2 and .1%. Lagging today were the financials and healthcare as the XLF and XLV fell 1.3 and .8% respectively.

The retail space has been feeling upbeat with the prospects of continued economic growth and consumer confidence on the rise. The tax cuts did not hurt and some stocks have been showing the benefits. Below is the chart of ETSY and how it appeared in our Friday 4/6 Game Plan. The stock one year ago was trading in the single digits briefly the week ending 5/5/17 which roared 20% off intraweek lows to CLOSE firmly above 10. It has since tripled with todays finish above the round 30 figure and acted well on a poor tape as well Wednesday. It is higher by more than 9% this week so far and looking for its third double digit weekly increase so far in 2018. The stock broke above a bull flag trigger of 29 on 4/10 and now looks like it wants to challenge all time highs made back in its first week of trading almost precisely 3 years ago, carving out a potential add on cup base trigger of 35.84.

ChartSmarter Wednesday Game Plan 4/11/18

Markets gained back where they traded at the highs just one session before, and the bulls were certainly elated to witness no afternoon selloff. It was good to see the Nasdaq and Russell 2000 act the firmest as they were higher in the 2% neighborhood. Adding to the positives the Nasdaq did not shy away from the 7100 number which was posing problems as of late. Peering at the Russell 2000 it recouped its 50 day SMA by a slim margin, and it is often a good leading indicator, and the other big three are all about 1% away from their own 50 days. "Old tech" giants INTC, HPQ and CSCO rose between 3-4%. It was a broad rally and hard to find much that was underwater for the day with the exception of utilities, REITs and airlines. The VIX has to be watch closely as it trades somewhat taut between 20-25 the last 12 days. A pierce either way will give valuable directional clues. And keep in mind we still have to see how the markets react to the impending Syria news some point this week.

Looking at individual sectors it was the energy space that had plenty of it today as the XLE up 3.3%. The ETF had been showing signs it wanted to move higher as it scored 2% gains or more three times in the last 3 weeks before Tuesdays session. Their was a tug of war between the bulls and bears the last 8 weeks along the 200 day SMA, and today certainly was propelled somewhat by short covering, but keep in mind their is still work to do. The last 8 weeks have all traded within the weekly range ending 2/9 which slumped 8%, and that was preceded the week before with a 6.5% slashing. Both of those horrific weeks were accompanied by the largest weekly volume in the last 10 months, and perhaps that was a washout giving way to new shareholders to bring the group upward. Backing up the energy group was technology, a bright spot with the XLK advancing 2.4%. Lagging Tuesday were the staples and utilities with the XLU recording the only loss of the major S&P sectors (still not used to calling real estate a sector).

Energy has been displaying nice strength recently, and today both the XLE and OIH reclaimed their 50 day SMAs. There have been winners and losers with CLR among our favorites, but you can include APC and EC in there too. Below is the chart of HAL and how it appeared in our in our Thursday 4/5 Game Plan. This has been a bit of a laggard still 16% off most recent 52 week highs, but like the previously mentioned ETFs it did not demonstrate to much volatility as the overall markets were swinging wildly in February and March. It made a stand at its 200 day SMA, a line that was resistance last November and December, as it did repair on its chart. After Tuesdays action, its cup base is taking on a better visual and it looks like the chart has some wind behind it and is ready to drill higher, pun intended.

ChartSmarter Tuesday Game Plan 4/10/18

Markets recorded their fourth consecutive volatile Monday with the Nasdaq higher by .5%, after being up more than 2% intraday. It did finish well off session highs as it reversed near the 7100 number which it did on 3/29 and 4/5 too and the following days lost 2.7 and 2.3% respectively. Before we get too bearish it has advanced 4 of the last 5 days. The 200 day SMAs of all of the top four indexes I follow, the Dow, S&P 500, Nasdaq and Russell 2000 are in close proximity and it will be interesting to see how they react if they are to come into contact with them again. The conventional wisdom states the more time a line is touched the stronger it becomes. I feel the opposite of that as the more times a line is touched the more likely to break. Surely there will be plenty of stops there as well, and it should make for some more chaotic action. Since the VIX CLOSED above the very round 20 number on 3/22, a figure that has become a line in the sand, it has registered just one finish underneath on 4/5. It happens to align with the upward sloping 50 day SMA too. The technicals as always are playing a role. Stay tuned.

Looking at individual groups it was just what bulls wanted to see with technology and financials leading the way before a late day selloff. It has been awhile since we have seen that formidable one-two punch, which has more often than not been from the utility or energy sectors. It ended up being healthcare that led after some M&A activity and the XLV rose by 1%. Industrials, cyclicals and staples lagged Monday with those three being the only losers among the major S&P sectors. Energy is still a big space to monitor as Monday was the third consecutive session that its downward sloping 50 day was tested and for now the bears are still in control. A break above that line would give the potential cup base under construction a nice look (today it recorded a rare doji candle only its second in the last 6 months).

Retail has been a standout for months now, after nearly every name was subject to the whims of AMZN, funny how we do not hear much of that anymore, perhaps because it is broadening its scope with the recent healthcare news for example. Again I track PRICE only so the reasons why are irrelevant. To be clear the chart of CRI, and how it was presented in our Friday 4/6 Game Plan, has not led but this former best of breed name deserves to be given a second chance. It certainly has seen its share of weakness still down 19% from most recent 52 week highs, but it did show some interesting aspects recently to give it a good risk/reward scenario. It did bounce almost precisely off the very round par number, touching 100.05 on 4/2, which also successfully retested a former short cup base breakout last November giving a "cluster of evidence" as we technicians say. That gives the entry a bit more stability. Of course nothing is fail proof, but this is a stock to watch over the coming months.

ChartSmarter Monday Game Plan 4/7/18

Markets were hit hard to end the week Friday as the Dow, S&P 500 and Nasdaq all lost more than 2% (the Russell 2000 declined 1.9%). All of the aforementioned benchmarks are still above their upward sloping 200 day SMAs, but underneath their downward sloping 50 day SMAs. On a weekly basis the Dow acted best down .7% as investors gravitate toward old, mature dividend paying names and obviously that is a concern. Its daily chart shows a break below a symmetrical triangle near 24600, which does carry a measured move down by 3000 handles, and it did fill in a gap to the upside on Thursday from the 3/21 session. At the expense of sounding like a broken record the Nasdaq was the laggard losing 2.1%. If one looks at the tech rich indexes RSI, the February correction quickly recaptured the bullish zone threshold 50 figure and it has done anything but that this time around. Next week should be critical for all the major averages as the old adage goes, "nothing good happens under the 200 day". Give indexes the benefit of the doubt here as the lines are still sloping higher, but patience is running thin.

Looking at individual groups Friday, no major S&P sector avoided the carnage, although it was easy to spot where the "best behaved" spaces emanated from, the defensive utilities and staples. The XLU still fell .8% and the XLP by 1% but this is becoming a common theme seeing them at the top of the leaderboard. Energy was the third best actor as the XLE dropped 1.8%, and the final 6 major groups fell between 2.1 and 2.8%. On a weekly basis it was energy that "led" with a loss of .1%, as it continues to try and break above its 50 day SMA and was stopped there for the second straight session. Interestingly it recorded its third consecutive weekly spinning top candle, a candle which often signals that the prior trend is losing steam. However one is going to want to see that break to the upside soon as the longer it fails to do so the downtrend it is in will most likely resume. Concerning once again was technology as the XLK fell the most this week by 2.1%. The bearish evening star weekly candle completed the week ending 3/23 is weighing heavily.

In this type of market environment we are in one is not to try and be a hero number one as capital preservation is paramount. Also one should be diligent about what names are outperforming on this fragile tape. Below is the chart of AAXN and how it was presented in our Tuesday 4/3 Game Plan. This week it rose better than 6% and it has acted well POST breakout from a huge cup base pattern that began the week ending 6/12/15 above 36.05, and they say the larger the base the higher the space. This name was influenced by round number theory as well with the 30 number acting as a stubborn wall the week ending 8/5/16 and this week registered its first weekly CLOSE above the 40 number and is well clear of the 40.25 bull flag formation trigger that was smashed through on 4/3 jumping more than 7%in nearly double average daily volume.

ChartSmarter Friday Game Plan 4/6/18

Markets followed through nicely Thursday as the Dow led the way with a 1% gain. The Russell 2000 and S&P 500 rose by .7% and once again the Nasdaq "lagged" higher by .5%. For the week heading into Friday the Dow is showing strength higher by 1.7%, more than doubling the S&P 500's gain of .8%. The wobbly Nasdaq has advanced .2% and it needs to be woken up, although it has produced its first three day winning streak in one month. All three of the previously mentioned benchmarks have the look of WEEKLY bullish hammer candles so far. The VIX did CLOSE below its 50 day SMA, and it is a start but it has done that in early March and stuck near the line only to recapture rapidly. Lets see how investors want to go into the weekend as Monday for instance the Nasdaq has witnessed big moves the last three. On 4/2 it slumped 2.7%, on 3/26 it jumped 3.3% and on 3/19 it fell 1.8%. One has to give the market credit as bulls seem empowered as they have been buying dips this week.

Looking at individual groups Thursday it was a risk on feeling with materials and energy leading the way as the XLB added 1.9 and the XLE rose 1.8%. The XLE is trading pretty taut between the 65-70 level for the last 2 months, and it has the feeling of a beach ball being held underwater. A push above 70 could be very powerful and today the ETF pushed against the 69 number once again, and today it was resistance at its lower sloping 50 day SMA. Technology once again took a back seat and one has to wonder now if its recent hibernation, was more than a healthy pause and maybe it has a significant injury. The XLK with all its volatility this week is higher by .4% for the week and bulls really need this category to step up to the plate. The .4% weekly return with one day left is the worst off the major S&P sectors. Healthcare lagged as the XLV dropped .1% Thursday.

Energy has been discussed here and being open to buying names that are showing strength, despite the XLE's weakness. If one looks underneath the surface there have been some nice charts. Keep in mind there was also been M&A activity with RSPP and CXO. Below is the chart of EGN and how it appeared in our Wednesday 4/4 Game Plan. Not surprisingly the round number theory came into play as it reverses at 60 on 1/9 and gravitated the next month to touch the very round 50 number before resuming its uptrend. The stock is defending the 60 figure now with 6 straight daily CLOSES above, and on a weekly basis it recorded just three weekly CLOSES above since the week ending 7/17/15, even though 16 weeks since then traded above 60 intraweek.