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ChartSmarter Tuesday Game Plan 2/20/18 Game Plan

Markets completed one of their best weeks in years Friday, but gains were well off session highs. The Dow and S&P 500 recorded pedestrian gains just above the UNCH mark and the Nasdaq was unable to maintain its sixth straight advance. The tech heavy index did record a doji candle after a 700 handle move top to bottom the last 6 days, but it could be forgiven after the weekly jump of 5.3%. The Dow and S&P 500 tacked on 4.3% themselves this week and CLOSING just above their upward sloping 50 day SMAs. The Russell 2000 showed strength as it rose .4% to finish out the week, but it was the only of the aforementioned four that was unable to end ahead of its 50 day SMA. The dollar lost ground for an 8th week in the last 10, as the UUP is now lower by 12% from most recent 52 week highs. Scouring over some commodities it was interesting to witness the disparity in some of the resources. Copper for one via the JJC is just 3% off its recent highs, while perhaps the world is becoming a bit healthier as sugar as judged by the SGG is lower 42% off most recent 52 week highs. The chart shows a bearish descending triangle with a break below 26 carrying a measured move to the single digits. Not that appetizing for longs, pun intended.

For the second consecutive session the utilities were the first and third best performing sectors, but this time instead of being sandwiched by technology on Thursday, the healthcare group was the second best actor, a perfect trifecta for the defensive spaces. Lagging Friday were the energy, materials and cyclicals. On a weekly basis, there were clear out performers. Technology was the big winner as the XLK soared 5.7%, although Friday was unable to complete the 6 session winning streak as it recorded a shooting star less than .5% away from filling in an upside gap from 2/1, the day chaos ensued. Second best were the industrial and financial sectors with the XLI and XLF jumping 4.7%. Energy was a clear loafer as the XLE rose "only" 2.2%, recovering very little of the prior two weeks combined losses of 14.5%.

Regardless of market conditions, as volatile as they have been, breakouts will often be retested just to prove their trustworthiness. For those trigger shy investors who missed the initial move it is often a good idea to wait for a successful retest. When that occurs it is never clear sailing but one could have more confidence in the trade. Below is a good example and is the chart of ETSY and how it appeared in our Thursday 2/15 Game Plan. This name retested an 18 cup base trigger that was taken out originally on 12/5 on 2/6 and was well underneath it intraday, but CLOSED firmly 12% off session lows. Investors would have taken note that as the major averages made lower lows on 2/9, but ETSY did not. Today the stock decisively traded through its rising 50 day SMA, the very round 20 number and also above a double bottom trigger of 20.35 in the third best weekly gain in the last 1 1/2 years gaining 12.5%. Add to now above a long 21.96 cup with handle trigger in a pattern that began the week ending 7/17/15.

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ChartSmarter Friday Game Plan 2/16/18

Markets continued their winning ways Thursday as technology outperformed very strongly once again as the Nasdaq rose 1.6%. The benchmarks even were pushed down after a decent open, and a lot of the bears came out before they gained their footing and marched higher. The Dow and S&P 500 CLOSED just above their 50 day SMAs, and if they can gain Friday would make it a perfect 5 for 5 this week heading into a traditionally bullish holiday shortened week. For the week headed thus far the Nasdaq has recouped all of last weeks outsized losses up 5.6%, the S&P 500 by 4.3% and the Dow has added 4.2%. The PRICE action is hard to ignore, and it has been as swift to the upside and it had been to the downside, but obviously people tend to complain less if they are making money long. I would not be surprised to hear the bears starting to voice their frustration even louder in the very near future, claiming volume is tepid at best this week (which is true), one sees these kind of violent snap backs that can be described as hallmark bearish activity. And finally they could hang their porridge hats on the fact that the real bottom feeders are beginning to show frothy behavior. UAA this week is up by one third, and FIT is up more than 5% this week (talking about health anyone remember VSI and GNC lower by 60 and 81% off their most recent 52 week highs). Even APRN attempted to join the party this week, but that has been stamped out so far.

Looking at individual groups Thursday it was almost a complete flip as to leadership today compared with Wednesday as the staples and utilities were the only major S&P sectors to fall. Today there were in the top three with technology sandwiched in between and it was the dull utilities that shined with the XLU dead catting a 2.2% advance. The ETF is looking for just its third weekly gain in the last 11 and one should not be surprised if it is rejected at the very round 50 number which was the trigger in a bear flag pattern. Talking about technology, the XLK is higher by 5.9% and if that gain holds tomorrow would be its best weekly gain in years. Lagging today was energy as the XLE was the only major group to lose ground falling .3%. Not sure the space got the memo the rest of the market is ripping, but keep an eye on FANG as it demonstrated excellent relative strength and has risen more than 13% this week heading into Friday.

We can not stress enough the importance of mining for names that held up well during the recent, "missed it if you blinked" correction. Many charts reset and those that did not have comfortable gains with a good basis were most likely stopped out. I expected a much longer time and process for the recovery to transpire, but it is ending almost as quickly as it began. Astute investors had cash on the sidelines and a well prepared watch list. First and foremost names should have been littered on that list that held up best during the struggle. Some did so by trading sideways and forming bull flag formations. Below is the chart of HLF and how it appeared in our Wednesday 2/14 Game Plan. It formed its flag with help of a round number which also was retesting a prior cup base breakout, solidifying the pattern. The stock broke above the trigger on Wednesday and still has a long way to go before it meets its measured move. Keep in mind it REPORTS earnings next Thursday.

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ChartSmarter Thursday Game Plan 2/15/18

Markets screamed higher Wednesday after an morning fall after inflation data was reported. To me the early on tell was the VIX being lower as the major averages dropped as the bell rang. They quickly reversed, and it was the Nasdaq that impressively led advancing 1.9%, and it reclaimed its 50 day SMA. For the fourth consecutive session it CLOSED in the upper half of its daily range and it looks as we could potentially have another V shaped recovery. Also a good clue was the Russell 2000 being the first index to enter the green and we know that is often a good indicator. All of the four previously mentioned benchmarks are about to enter the bullish zone above the 50 RSI number, and if they are successful in doing so could lead to further gains. The 10yr yield climbed above 2.9% today, which is near the level that exacerbated the recent sell off. Good news being interpreted as good news? What a novel idea.

Thursdays action was just what the bulls wanted to see, led by financials and technology. Conversely the defensive staples and utility sectors were shunned today as the XLP was flat and the XLU slipped 1.1%. Banks deposited firm gains, pun intended, and the XLF is on a 4 session winning streak after last Friday successfully filled in a gap from 11/28/17, and it recaptured its 50 day SMA in the process. The FANG names have been cooperating handsomely. AMZN is higher by more than 100 handles this week after last Fridays bullish hammer candle precisely off the upward sloping 50 day SMA. AAPL is up nearly 7% this week headed into Thursday after a nice double bottom was put in at the very round 150 number last Friday with the 9/25 session (the 9/25 session also filled in a gap from 8/1/17).

Below is the chart of OLED and how it appeared in our Wednesday 2/7 Game Plan. It illustrates a few different, important factors. Number one weakness was potentially on tap after its failure to remain above its cup base breakout trigger of 192.85 taken out on 1/8. The best breakouts tend to work right away, and it did burst higher by another 20 handles but soon fizzled out. The stock went on a 3 week losing streak that fell a firm 33% the weeks ending between 1/26-2/9. Candlesticks are often very good at picking out short term tops and bottoms and a bearish engulfing candle on 1/19 led to the downside we just mentioned. On the bull side, the bullish engulfing candle on 2/6 took place in conjunction with the upward sloping 200 day SMA, which was retested with a harami on 2/9 again at the 200 day SMA, what technicians would call a "cluster of evidence". Today it jumped 9% and still lies 24% off most recent 52 week highs.

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ChartSmarter Wednesday Game Plan 2/14/18

Markets recorded a lukewarm, second consecutive "turnaround Tuesday", and the Nasdaq led up .5% after rallying more than 300 handles off intraday lows on 2/6. Today it battled with the round 7000 number, and won, and registered its first three session winning streak in three weeks. It is now approximately 1% away from its still upward sloping 50 day SMA, and the fear is that line that was consistently support for more than a year will now become resistance. One would be surprised if there was not at least an initial struggle there if retested. That 7000 figure was influential as well as it was the breakout about a bull flag trigger that overshot its 300 handle measured move this year. This tech heavy benchmark is a leader, and the closest to its 50 day currently, so the other major indexes will most likely take their cue from how it responds there. A boatload of market participants are most likely holding that same belief and could be the reason why it may just burst right through.

Looking at individual groups it was the staples, financials and cyclicals that rose in the .5% neighborhood. The XLP had registered one of the better looking breakouts recently, with a move above a very tight digestion period through 57, during a 7 week stretch weeks ending between 12/1-1/12 that all CLOSED with a 56 handle. The week ending 1/19 broke above that pattern, which also recorded a break above a cup base trigger of 57.46 in a base that began the week ending 6/9/17. Of course along with the overall market the ETF faltered, but has acted well since last Fridays bullish hammer candle. Now comes the hard part as it attempts to recapture its 200 day SMA. Lagging Tuesday were materials and energy. The XLE is now sitting on its 200 day SMA, but that two week shellacking of 14% the last couple weeks, with last weeks 8% plunge coming on the largest weekly volume in almost 2 years shows the chart has a lot of repair work to do.

The semiconductor group is trying to rebound after a recent regrouping as the SMH recorded a bullish harami candle last Friday. Keep in mind its cup with handle breakout above a 104.06 on 1/17 trigger failed, but is a good example of why it pays not to give up on a former leading sector. Below is the chart of CREE, a former laggard which is making positive amends. Notice it did run into trouble at the round 40 number with a spinning top candle last December, but retested a bull flag breakout on 2/6 that aligned with the round 30 figure. A good tell was the UNCH finish on 2/8 as the Nasdaq imploded nearly 4%. That gave investors the signal if the market could find some footing this could potentially be a good place to put some capital to work. Its 50 day SMA is not flatlining and one can add to their stake with a buy stop above the line at 36 now and add to finally through a double bottom trigger of 39.10 which was created with the reversal after earnings from the 1/24 session.

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ChartSmarter Tuesday Game Plan 2/13/18

My apologies for the brief report. I am very much under the weather at the moment.

Stocks that can be bought as they pullback into the round numbers are EOG. EOG is a best in breed energy play lower by 4% YTD and higher by 2% over last one year period and sports a dividend yield of .6%. Earnings have been mixed with gains of 1.5 and 3.2% on 11/3 and 5/10 and losses of 2.3 and .9% on 8/2 and 2/28. The stock dropped 15.5% the last 2 weeks, but prior to that rose 18 of 23 weeks ending between 8/25/17-1/26/18. A bullish morning star candle was completed Monday, with last Friday recording a bullish hammer precisely off rising 200 day SMA. It is attempting to get back above double bottom breakout trigger of 104.52 from 12/21. Enter EOG on a pullback into round number at 101.50.

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