Douglas Busch

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ChartSmarter Monday Game Plan 6/11/18

Markets ended the week in lukewarm fashion with the Dow, Russell 2000 and S&P 500 adding .3% and the Nasdaq rose .1%. The S&P 500 recorded a bullish engulfing candle and continues to gather steam higher following its recent breakout above a symmetrical triangle. Its 50 day SMA is now curling higher for the first time in a meaningful way in 3 months. Next week is key for the Nasdaq as it wants to put to bed any thoughts of a double top with the mid March highs. Its weekly candle looks somewhat like a bearish shooting star, as it finished off intraweek highs, something the Dow and S&P 500 did not do, ending at highs for the week. On a weekly basis it was the Dow that shined higher by 2.8% its best weekly gain in 3 months, followed by the S&P 500 up 1.6, the Russell 2000 by 1.5 and the Nasdaq by 1.2%. On a YTD basis it is still the Nasdaq beaming in the spotlight higher by 10.7, the Russell 2000 by 8.9% keeping the Nasdaq honest. The S&P 500 is up 3.9% in 2018 and the Dow moves back into positive territory after this week with a rise of 2.4% so far.

Looking at individual sectors Friday leadership was suspect with the staples acting best with the XLP gaining 1.2%, followed up by healthcare which rose .5%. Healthcare put in a decent week advancing 2% and is quietly building the right side of a potential cup base as it is higher 7 of the last 9 weeks. Technology and energy were your two laggards on the session with the XLK and XLE falling .2%. Utilities were the only other group to lose ground as the XLU fell fractionally by just 2 pennies. Taking a look on a weekly basis the XLY was your best behaved higher by 3.2% and this Thursday broke above a cup base trigger of 109.44. The materials via the XLB rose 3%, and the financials rose by 2.2%. The XLF did put in a decent weekly advances of 3.6 and 2.8% ending 5/11 and 3/30, but were unable to produce any real follow through, so next week could be key. The ETF is lower 8 of the last 13 weeks and one has to go back to the week ending 12/8/16 to see a week of accumulation.

Retail has been a bit bifurcated with earnings reactions this past quarter, but overall it is easy to spots the winners from the losers. The discretionary subsector has layers within plain retail and footwear has been a bastion of strength. WWW has broken above a cup base trigger of 33/92 the first day of this month. NKE broke above a bullish ascending triangle that aligned with the round 70 number a few weeks back and has gradually made its way higher. SHOO has advanced 10 of the last 11 weeks and DECK is on a 7 week winning streak with the last five all CLOSING at highs for the weekly range and each rising more than 4%. Below is the chart of CROX and how it was presented in our Wednesday 5/29 Game Plan. The stock is on a 5 week winning streak of its own and is sniffing out the very round 20 number after breaking above a cup base trigger of 17.53 on 5/s0 and has acted well POST breakout, just what you want to see.

ChartSmarter Friday Game Plan 6/8/18

Markets displayed bifurcated action Thursday as the Dow was marginally positive to the tune of .4%, The S&P 500 down .1%, and most concerning was the lack of leadership the Nasdaq or Russell 2000 demonstrated. The Nasdaq fell .7% and the Russell 2000 lost .5%. We will stress leadership is allowed to take days off but one certainly wants to see these two benchmarks regain their foothold on the leaderboard. The Nasdaq did register a bearish engulfing candle today reversing at the round 7700 number and finding a pedestrian bounce at the 7600 figure. It looks eerily similar to the 3/13 engulfing candle which led to swift selling. Volume was a bit elevated as trade today was the fourth largest in the last 2 months. One positive in todays session was the lack of VIX vigor. It was up better than 4% but was pushed back near its 200 day SMA and looks like a potential bearish MACD crossover is on tap.

Looking at individual sectors Thursday it was energy that for the lack of a better word woke up energized. The XLE was easily the best performer today with the XLE higher by 1.5%, more than doubling its second nearest space the utilities. The XLU put in a decent session gaining .7%, but one has to keep this group in the penalty box until it can show any resemblance of strength (it did record a bullish inverted hammer candle putting a 4 day losing streak to rest). The third best actor Thursday were the staples with the XLP rising .4% giving the day a "risk off" feel. Lagging were materials and technology which had been robust the last 2 days as the XLB and XLK fell .5 and .8%. Heading into Friday all of the major S&P sectors are in the green, except for the utilities that are still down a large 3% this week so far.

My readers know I am a big fan of candlesticks, but as always PRICE action supersedes all else. If PRICE and the candles align the idea will have more conviction. When you couple that further with a name that has lagged when peers in the group are flourishing that makes it all the better. Below is the chart of CHRW and how it was presented in our Thursday 5/24 Game Plan. First of all the stock is underperforming as it now trades 12% below most recent 52 week highs, whereas rivals ODFL and JBHT trade just 2% off theirs. That should raise ones antennae. Marry that with a double top near the very round par number this January and April, with bearish candlesticks on each of those sessions and a decent risk/reward short situation arises. CHRW also filled in a gap with resistance at the 50 day SMA. This set up is still in play, and with all the bearish connotations I must say maybe it is to good of a short, but as always let PRICE dictate your actions and keep your losses small.

ChartSmarter Thursday Game Plan 6/7/18

Markets have been firing on all cylinders recently and Wednesday was no exception. The Nasdaq is now in a series of higher highs and lows since January and although it did sit out somewhat today it is on a 4 session winning streak, even with INTC AAPL and MSFT lower on the day early on before eking out mild gains. The Dow showed force higher by 1.4%, the best acting of the big four, courtesy of BA its largest priced component with the second best performance of the 30 stocks. The Russell 2000 now higher 17 of the last 23 days rose .7% and the S&P 500 added .9%. The VIX is now on a 4 day losing streak and looking to CLOSE in the lower half of its weekly range for a sixth consecutive week. Retail looks solid as the XRT approaches a cup base trigger of 49.19. Surely this benefits the XLY, but some real strength is being seen in the automobiles in the discretionary space. TSLA GM and even F have been driving higher.

Looking at individual groups Wednesday it was satisfying for the bulls to see the financials acting as the best performer. The XLF advanced 1.9%, just outdoing its nearest competitor as the materials, via the XLB, which put up a second straight nice showing up 1.85%. And for the second consecutive day the staples and utilities wavered as the XLP and XLU were UNCH and down 2.4%. The XLU seems to be losing its battle with the very round 50 number and the ETF is lower by 15% off its most recent 52 week highs and has declined 4 of the last 5 weeks and this one by 3.5% so far. If that holds it would be its worst showing in almost 7 months. The XLV cleared the 84 level today which it has had trouble with the last 6 weeks and remember this ETF has been wound real tightly as the last 4 weeks all CLOSED within just .42 of each other.

The knock on the markets recently has been the lack of participation of the financials. Of course when the mainstream media talks about this they mean the big money center banks. Wednesday the XLF reclaimed its 200 day SMA and registered its third 1% plus gain in the last 6 sessions. We always mention how broad and diverse groups are and the finnies are one of the largest, and below is the chart of a business service play and how it appeared in our Tuesday 5/6 Game Plan. The stock is nearly 3 years old and for the last month had issues with the round 70 number until breaking above Tuesday. It acted well after breaking above a 61.52 cup base trigger, we know the best breakouts work right away, and now its measured move after trading above the flag is to 76. Never have been a fan of measured moves though as they could be selling too soon and leaving potential big gains on the table.

ChartSmarter Wednesday Game Plan 6/6/18

Markets continue to impress as they are now in new high ground. Far from backing away from the current altitude they are making a stand. I am a big believer in candlesticks, but obviously know PRICE is omnipotent. Their is truth in price. The Nasdaq up another 1% already this week so far, and is nearing the bearish engulfing candle from 3/13, and the beat of the "most hated bull market in history" keeps moving northward. My opinion, and they are worth nothing at all, is that many are not positioned for more upside and for that reason believe that the indexes are well rested and have stamina to potentially move higher in a meaningful way. It was great to see the Nasdaq and Russell 2000 lead as the benchmarks rose .4 and .7% respectively. The consumer is showing his appetite for spending as retail names are white hot. This week M has advanced more than 12% and has doubled since the weekly bullish engulfing candle the week ending 11/10/17, and now testing the round 40 figure.

Looking at individual sectors the leaderboard was crowded with the right types of groups, if you are a bull. Participation came from materials, cyclicals and technology with the XLB higher by .8, XLY .6 and XLK by .4%. The XLY is looking firm as it approaches a 109.44 cup base trigger in a pattern that began with the beginning of the correction earlier this year on 1/29. The XLY has CLOSED at the top of its weekly range for the last 6 weeks and is now looking to break above the robust run as the ETF advanced 11 of the 12 weeks ending between 11/10/17-1/26. The bulls are welcoming the seemingly habitual presence recently of the staples and utilities lagging. Both the XLP and XLU lost .5 and .6% and were joined there by financials and energy with the XLF and XLE slipping .4 and .3%. The XLF still looks messy to me and the fact that they have not responded to looser regulation and the perceived notion of higher interest rates is concerning.

Healthcare names are mustering some strength with some intermittent busts with the likes of NKTR and CTMX cratering this week and both of those names are now 50 and 37% off their most recent 52 week highs respectively. Interesting they both bounced near the very round 50 and 20 numbers, but for me there is no play on either of them as there are much better fish to fry. One of them that fell apart more than the aforementioned two is VRX, and below is the chart and how it was presented in our Friday 6/1 Game Plan. The stock which rose 6 of the last 8 weeks, with all CLOSING in the upper half of the weekly range. More impressive was the three ending between 5/18-6/1 all finishing tautly within just .16 of each other, which has sent the name higher by nearly 7% so far this week. Keep your eye on this one, pun intended (they have contact lenses in their portfolio of products).

ChartSmarter Tuesday Game Plan 6/5/18

Markets kicked off a new week with vigor Monday as the Nasdaq put its best foot forward, which is becoming a welcoming habit. It rose .7%, in line with the Dow's advance, but it competing for the top spot among the big four indexes on a regular basis now is just what bulls want to see. Perhaps its long hibernation was a restful and rejuvenating one. A little concern was the Russell 2000 which still added .2% today, but was in the red for a small portion of the session. Of course this benchmark has been on a powerful run so a prudent pullback could actually be beneficial. Transports were not in a jolly mood or in sync with the overall markets as the IYT and its action since the bearish engulfing candle on 5/22 is anything but positive. Volume trends have been bearish and the 197ish area continues to be a roadblock, pun intended. Strong moves were seen in some of the retail names as ULTA, WMT and ROST. The last 2 names in the discount arena has seen some real bifurcation as ROST trades 3% off most recent 52 week highs while WMT is 22% off its own. Leaders like FIVE and WSM continue to impress.

Looking at individual sectors to start the week there was some encouraging news as cyclicals and technology were a strong one-two combo of the major S&P groups, with the XLY and XLK up 1.1 and .8% respectively. Retail helped propel the discretionary space as the media touts they are doing a much better job to offset AMZN's influence. Of course AMZN is the largest component in the XLY, three time bigger than the second presence HD, and its performance has failed to back up that claim as it has not suffered whatsoever. In fact it is now on an 8 session winning streak and acted very well above the round 1600 figure which previously gave it some trouble this March-June. Lagging today were the utilities and energy as the XLU fell .8% and the XLE slipped .9% as XOM registered a bearish engulfing candle and it looks more and more that the promising long term weekly ascending triangle trigger just below 79, may well be a triple top. Stay tuned.

After Fridays jobs report the economy seems to be humming along. Of course there can be a disconnect between the stock market and the economy, but it is always a good idea to monitor what groups that have a pulse on the true health of the economic engine. The transports have been sending a positive signal overall, although todays action in the IYT left something to be desired. That paper and packaging plays can also give us a tell as to what the strength is among consumers and therefore corporations. Below is the chart of IP and how it was presented in our Monday 5/21 Game Plan. Until today it had been swimming below its 200 day SMA for 3 months but a thrust above Monday of almost 4% in well above average daily volume excited bulls. It is still 14% off most recent 52 week highs, but has recorded a nice double bottom at the very round 50 number the weeks ending 3/23 and 5/4 and the right side of a potential cup base is beginning to take shape. Stay long above the 200 day and the potential cup base pivot is 67.04.