Douglas Busch

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ChartSmarter Monday Game Plan 6/18/18

Markets are doing their best to confound the most as the benchmarks rallied well off session lows Friday, as bears were probably salivating at a soft finish to end the week. The Dow rallied nearly 200 handles off intraday lows, the Nasdaq bounced off the round 7700 number and the S&P 500 and Russell 2000 nearly ended the day UNCH. The tight action on the S&P 500 looks to have put in a handle on a cup base that began in late January. The Russell 2000 did record a doji candle, which could indicate a possible weakening of the prevailing trend, but as always PRICE action comes before everything and it has been hard to deny that it has been anything but bullish. On a weekly basis the bulls should feel good heading into the weekend as the Nasdaq broadly outshined its competitors gaining 1.5%. Second best was the Russell 2000 up .7%, the S7P 500 was UNCH and the Dow FELL .9%. On a YTD basis the Nasdaq also comfortably maintains its healthy lead up 12.2%, the Russell 2000 by 9.7%, the S&P 500 4% and the Dow up 1.5% in 2018.

Looking at individual groups at the expense of sounding like a broken record it was defensive in nature as the staples and utilities provided a solid one-two punch with the XLP and XLU adding 1.3 and .7%. In fact both of the two aforementioned groups were the best performing sector 4 of 5 days last week. Lagging very badly Friday was energy as the XLE slumped more than 2%, and it seems all but confirmed that the triple top dating back to late 2016 is now confirmed. It is on a 4 day losing streak and CLOSED just below its 50 day SMA. On a weekly basis the XLE was easily the worst actor falling 3.6%, just 3 weeks after the 4.5% drilling the week ending 5/25. The second worst space was the financials with the XLF losing 2.2% and the best performer was the XLY advancing 2%. Next week will be an interesting one as technology, via the XLK, could potentially complete a 3 week tight pattern as the last two CLOSED within just 4 pennies of each other.

It has been said recently that consumers are spending their hard earned dollars differently than they have in the past. That was spoken about in the months prior to almost the entire retail space being under assault by AMZN. A lot has changed in 2018 as the XRT is now above a 49.19 cup base trigger taken out on 6/8 and the ETF recorded a bullish engulfing candle Friday, just 2 sessions after a bearish evening star was completed as it struggles with the round 50 number. But consumers overall have been spending money and that has also trickled down to the casual diners. We have seen CMG reclaim its best in breed status, SHAK has its groove back and below is the chart of BJRI and how it was presented in our Wednesday 5/29 Game Plan. It has more than doubled since the week ending 9/8/17 and has lost ground just 8 weeks so far this year. No indigestion here for long shareholders, pun intended.

ChartSmarter Friday Game Plan 6/15/18

Markets continue to prove their resiliency as the Nasdaq showed the way with a jump of .8%. The S&P 500 and Russell 2000 rose by .2 and .5% and the Dow was off by .1%. The Nasdaq is still garnering the spotlight with good merit CLOSED above yesterdays bearish shooting star showing the PRICE action is omnipotent. It pushed away from the round 7700 number that it was shying away from the last 2 days, and don't look know but it is higher by 1.5% heading into Friday and if that holds would be a FOURTH consecutive weekly advance of 1% or more. The S&P 500 is trading taut with the last 6 days not finishing up or down more than .4%. It is higher by a more pedestrian .1% this week so far, but one still has to be impressed with last weeks 1.6% jump, breaking through the previous four weeks all CLOSING tightly within just 22 handles of one another. This type of coiling action can lead to explosive moves and perhaps we are beginning to see a possible beach ball held underwater effect going forward as many still seem to be fighting the uptrend and positioned incorrectly.

Looking at individual groups Thursday leadership among the spaces was somewhat dodgy. Utilities led as the XLU gained 1.3%, but it was backed up by some decent sectors as cyclicals and technology also rose nicely by 1 and .7%. The XLU is still 13% off its most recent highs and it still needs to prove itself but going into Friday is higher by 1.9%. It could be filling out the long bottoming pattern here as it trades somewhat sideways, albeit at a lower altitude, with 16 of the last 18 weeks CLOSING between a 48-50 handle. Lagging badly were the financials with the XLF off by .8% and for the week is down 1.7%, giving back nearly all of last weeks 2.2% jump. We discussed how the ETF has failed to show any follow through after decent up weeks since the February slump at the round 30 number. Energy was off once again Thursday and is now down 3 sessions in a row and still seems stung by the bearish engulfing candle on 5/22.

As the markets march higher, if certain stocks are not being dragged along with it one should at the very least be concerned. A rising tide generally lifts all boats, and those that are left behind are usually done so for a reason and could be a tell going forward. Below is that chart of CASA, a recent software IPO and how it was presented in our Tuesday 5/14 Game Plan. It is now 46% off most recent 52 week highs and I like to say trends in motion tend to stay that way more likely than they are to reverse (not my quote). This name is now down 9 of the last 12 weeks and by more than 9% heading into Friday. The bleeding began, with help from some bearish candlesticks that created a double top near 34. A retest on 4/18 with a bearish hanging man candle touched the within the bearish engulfing candle from 3/16 that lost more than 6% on the third largest daily volume ever.

ChartSmarter Thursday Game Plan 6/14/18

Markets put in a rather listless session Wednesday, until the last half hour, as the Nasdaq "outperformed" down .1%, while the Dow, S&P 500 and Russell 2000 dropped between .3-.5%. The Nasdaq that I like to key on has started to become very taut in regards to its trade. Today marked the eight consecutive day without a gain or loss of more than 1%. Could one use the "don't sell a dull market" phrase with that action? Probably not after todays bearish shooting star at all time highs, but one has to come away impressed how it is holding up near former higher and not backing up much. Now of course it is good to stall a bit or base, but one does not want to see to much time pass without another leg higher. A tell perhaps as to "risk on" coming back would be the JNK quietly continuing its 8 day winning streak (today was UNCH registering a doji candle).

Looking at individual sectors it felt soft as just one of the major S&P sectors was able to gain ground Wednesday. Leading were the cyclicals and healthcare adding .2 and UNCH respectively. The XLY is acting well POST breakout, exactly what you want to see,  from a 109.44 cup base trigger taken out on 6/7 and is now on a current 9 session winning streak. Of course the ETF benefits from a healthy AMZN which makes up nearly 22% of the fund. The XLV is approaching a bullish ascending triangle trigger of 86 and a break above there will carry a measured move to 93. Lagging Wednesday were the industrials and materials with the XLI and XLB falling .8 and 1.1%. One could make the case for a bullish inverse head and shoulders pattern on the XLI and a move through the 77 area carries a measured move to 84.

I am a big fan of the round number theory. Stocks, or other instruments, tend to stall there or find support. Of course it is not foolproof but the theory is viable. Below is the chart of ROKU and how it appeared in our Tuesday Game Plan this week. The entry was NOT hit, but it does demonstrate how names will find both support and resistance the round numbers. ROKU found support at the 30 number on 4/3 with a bullish engulfing candle which happened to fill in a gap from the 11/9/17 session and also successfully retested a prior cup base breakout trigger of 29.90 originally taken out on 11/9/17 too. It did stall a bit at the 40 figure recently which happened to be good support back in January-February as well. The stock is higher by nearly 11% this week on above average volume already with still two days to go this week.

ChartSmarter Wednesday Game Plan 6/13/18

Markets held up relatively well Tuesday as the Nasdaq and Russell 2000 scored nice gains higher by .6 and .4% respectively. The Nasdaq CLOSED just above the round 7700 number and the tech heavy index is looking for its first four week winning streak since this January. The bull flag breakout which began at the very round 7000 figure on 5/3 broke above its 7450 pivot and has a measured move to 7900. Big names that will have a big say in its future direction include of course AAPL which retested a 190 bull flag breakout trigger on 6/8 which also filled in a small gap (it has a measured move of 30 handles). Semis certainly will make their presence felt too and today recorded a bullish hammer candle as it deals with the bearish engulfing candle from 6/7. It is still acting well POST breakout from its double bottom breakout trigger of 106.24 taken out on 5/16. The XBI could provide a boost too as it looks to move above a triple top at the 98 area.

Looking at individual sectors Tuesday it was utilities that rose a firm 1.2%. The XLU represents one of the weakest groups, so again leadership is suspect. The second and third best actors were better for the bulls as technology and cyclicals both gained .5% via the XLK and XLY. Financials and energy lagged as the XLK lost .4 and the XLE surrendered .8%. The XLE has been reeling since the 4.5% weekly bearish engulfing candle. Keep in mind the 78 level serves as a triple top dating back to December '16. The ETF has now declined 10 of the last 15 sessions and to its credit it did successfully retest a cup with handle/bull flag trigger just below 75 on 5/25 and 5/29, but we know the best breakouts work right away so this stalling action needs to resolve itself shortly. Volume trends need to improve too as we have seen just one accumulation week in the last 7 months the week ending 5/11 which rose nearly 4%.

Footwear continues to gain traction as we have recently spoke about CROX and NKE. ADDYY a former best of breed name trades 13% off its most recent 52 week highs, but is digesting a 6 week winning streak that rose by more than a combined 20% the weeks ending between 3/16-4/20. Below is the chart of WWW and how it was presented in Monday 5/21 Game Plan. It is higher by nearly 2% this young week so far and that is on top of a current 5 week winning streak that has risen nearly 18%. Looking left on the chart one can see it is now comfortably above the 34 level, where it ran into problems in the past back in January '14, April-May '15 and again earlier this year before breaking above a cup base trigger of 33.92 on 6/1 and has since flown 6% above the suggested pivot.

ChartSmarter Tuesday Game Plan 6/12/18

Markets began the week in pedestrian form, as most pundits were looking for losses near 1% at the open after the tariff chat over the weekend from abroad. Benchmarks did not seem to care as the Dow, Nasdaq, S&P 500 and Russell 2000 all rose modestly between UNCH-.2%. Remember uptrends, or downtrends for that matter, are more likely to persist than reverse and one should keep their own personal opinions in check and focus on PRICE action. All four of the previously mentioned indexes 50 and 200 day SMAs are sloping higher and the chart that I am monitoring the most is the Nasdaq as it traded tightly between the 7600-7700 figures the last 5 days. A move above 7700 negates the bearish engulfing candle from last Thursday and any doubts that a double top from early March is in play. Transports, for all the Dow Theorists, were firm Monday as the IYT flirted with the round 200 figure. The ETF has CLOSED at the top of its weekly range for 5 straight weeks and is now sniffing out a potential 206.83 cup base trigger in a pattern that began the week ending 1/19. All aboard?

Looking at individual sectors Monday leadership was once again a bit suspect with staples showing the way. The XLP is looking to build upon last weeks move of 2.4%, after spending five straight weeks CLOSING below the very round 50 number. It rose .8% today and is above its 50 day SMA for two straight days for the first time since the beginning of February. Lagging Monday were the utilities which usually are attached to the hip of the staples, and technology was a bit soft as the XLK rose a scant .1%. The financials were the only other group to perform worse then technology as the XLF fell by just .2%. Remember the XLF has lost value 5 of the last 7 weeks, but the 2 up weeks were impressive higher by 3.6 and 2.2% the weeks ending 5/11 and 6/8. The market would really appreciate some follow through in this arena as the ETF has not seen back to back up weeks since mid April.

I am certainly no gold bug, and I rarely post or review many of the names in the space. But I am impartial when it comes to charts and this best of breed player below is precisely how it was presented in our Wednesday 6/6 Game Plan. The stock was having issues with the very round 90 number, as it had just one CLOSE above since 9/20/17 on 5/11 and that was immediately followed up by a bearish engulfing candle. Today marked its fifth consecutive CLOSE above the 90 figure, and that included a bounce almost exactly off the number last Thursday with a bearish dark cloud cover candle. The 90 number also aligned with a bullish ascending triangle pattern which since breaking above it now has a measured move to the very round par figure. This chart is glittering good risk/reward, pun intended.