ChartSmarter Thursday Game Plan 3/29/18

Markets ended in the red Wednesday with the previously leading Nasdaq lagging as the tech benchmark slumped .85%, although it did bounce off the round 6900 figure. It recorded a spinning top candle after dropping more than 700 handles following the bearish engulfing candle on 3/13, and it is now less than 1% higher YTD. That particular candle often signals a softening of the prior trend and the index is now 9% off most recent all time highs. For the week it has declined .6% as the S&P 500 and Dow have risen .6 and 1.3% respectively. The Russell 2000's 50 day SMA is now pointing lower and we have been looking at that and the VIX for clues to the direction of the overall markets. The Russell 2000 ran into trouble near a double top just above the round 1600 figure with bearish engulfing candles on 1/24 and 3/3. The VIX seems to be having some shyness at the 25 figure as it has reversed there, as it was above 25 three days so far in March but was failed to CLOSE above. The markets certainly have the feel of carrying an anchor on its back, but shorts are in a difficult spot here after a feast.

Looking at individual sectors there was some bifurcated action with another suspect group leading Wednesday as the staples via the XLP rose by 1.4%. The ETF is lower by 11% from recent 52 week highs and has sported gains of 1% or better 2 of the last 3 sessions after a 10 day losing streak between 3/12-23. The only other major S&P groups to advance today were healthcare and the financials as the XLV added .5 and the XLF .2%. Lagging were the discretionary, materials and energy plays with the XLY down 1.2, materials by 1.3 and energy slumped 2%. On a weekly basis there are some interesting scenarios as technology is lower marginally by .2% heading into the last day of the holiday shortened week. If that holds tomorrow it would be the ETF's first 3 week losing streak since the first 3 weeks of 2016. On the flip side the best acting group for the week again is suspect as the staples via the XLP are higher by 2.8%, more than double the second best groups with healthcare and financials higher by 1.4% heading into Thursday.

The tech sector continues to unravel, but search for names that have been holding up very well for when the group turns higher, no one knows when for sure, they will be the first to sprint out of the gate. Below is the chart of AKAM and how it was profiled in our Thursday 3/15 Game Plan. We do confess it is harder to discover stocks that are holding up well, especially in technology which was a big outperformer. That does not mean you discard the group, but just the opposite one should build a watchlist and look for plays that hold up the best compared to peers. AKAM fits the bill as it looks to consolidate here as it trades 10% off most recent 52 week highs and near the round 70 figure. It is looking to find support at its rising 50 day SMA following a break above a double bottom trigger of 68.75 on 3/2. The spinning top candle on 3/9 has sent it lower quickly, but is giving investors a good risk/reward entry here.

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ChartSmarter Wednesday Game Plan 3/28/18

Markets reversed hard from intraday highs today, but it was really the Dow that was very firm early on, as the Nasdaq, S&P 500 and Russell 2000 were higher marginally so. When money flocks to the big caps it is one of the traits of an aging bull. The Nasdaq was pummeled and showed no follow through at all from Mondays robust session. It gave back a big chunk of Mondays 3.3% gains and today was the fourth consecutive 2% move for the tech rich index, the first time since October 2011. It has lost ground 8 of the last 11 days, and 9 of them CLOSED in the lower half of their intraday range. Recently it was the troubles of FB that wounded the index, and it still is, now 22% off most recent 52 week highs. Today it was joined by the negative action in NVDA, which slumped below its 50 day SMA for the fourth time since last November. It reversed just 2 pennies below the very round 250 number once again and lost almost 8% Tuesday. The VIX bounced off the very round 20 number today and the volatility seems to be here to stay for awhile.

Looking at individual sectors it was the boring utility and staple sectors that made their presence felt as they were the only major S&P groups to finish up or near UNCH. The XLU rose 1.4% scoring its second highest CLOSE since the last day in January, and its 50 day SMA should begin to incline soon. It was its first CLOSE above the very round 50 number int he last 7 days, and 5 of the 6 were above intraday. The XLP fell 2 pennies Tuesday and it was the flip of Monday as the financial, cyclicals and technology that lagged. Technology via the XLK fell 3% meeting resistance at the 50 day SMA which is starting to flatline, recording a bearish engulfing candle. It is now down 9 of the last 11 sessions and would have been 10 out of 11 if it were not for the fractional four penny gain on 3/15. The ETF is still making higher highs and lows but now sits 9% off most recent 52 week highs and slashing its 50 day SMA for the second time in as many months has the bulls on the defensive.

The bullish ascending triangle is a pattern I have been seeing more of recently as leading names are making higher lows, but unable to pierce above a top horizontal line as names try and overcome the recent market malaise. The ones that break above could very well be your future winners. Below is a chart of a telecommunication technology play HRS and how it appeared in our Wednesday 3/14 Game Plan. It has doubled over the last 2 years after moving off the round 80 number. The name is now higher 6 of the last 9 weeks and has advanced 3.8% this week already. It was having issues CLOSING above the round 160 figure with SEVEN days trading above 160 intraday since the 1/31, but zero CLOSES above until the first two days of this week (today reversed recording a bearish dark cloud cover candle however). The 160 number also served as a breakout above a bullish ascending triangle, which if it could hold here has a measured move to just underneath the round 180 number.

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ChartSmarter Tuesday Game Plan 3/27/18

Markets put on a good face Monday and there was a healthy amount of skepticism throughout social media as it was very hard to find someone bullish over the weekend. Of course there is still an enormous amount of damage to be worked off for the benchmarks and today was a good start. We know we do see some of the most violent rallies in bear market tendencies and we are not near there quite yet but it certainly felt like a lay up to short the super strong open, and any who did saw the powerful opening gains cut in half. But the late morning bounce continued and proved for real. Looking at the 10 year yield its chart is one of beauty, and many use this as an excuse of why markets will have headwinds because of it. It is bull flagging and has last Thursday found support at its rising 50 day SMA after a recent cup base above a 2.47 level. A break above a 2.95 flag pivot carries a measured move to 3.45%.

Looking at individual sectors it was just what the bulls would have scripted if they could have Monday. It was technology and financials that led with the XLK and XLF rising 3.8 and 3.2% respectively. "Lagging" were energy, staples, and the utilities all gaining by 1.8, 1.4 and 1%. It was indeed a broad, healthy rally as all nine of the major S&P sectors advanced. Of course the enthusiasm has to be contained as the ETFs basically recovered just last Fridays losses as the XLK slumped 2.7 and the XLF by 3% to end last week. Like the XLF which last week recorded almost an identical double bottom, separated by a penny on 2/9 and 3/23, the XLV did nearly the same with just 5 pennies the difference on the same dates. The round 80 number is holding up for the moment and needs to as the figure is the horizontal line in a bearish flag formation. A pierce and CLOSE below would carry a measured move lower by 12 handles.

The airline plays have been through a lot of negative media recently, with pets and altercations, but we focus purely on price action. Some obviously have acted better than other and it pays to keep an eye on which names are acting well and poorly. Below is the chart of SAVE and how it appeared in our Friday 3/23 Game Plan. As peers AAL and DAL are off just 12 and 9% from most recent 52 week highs, SAVE has floundered as it sits currently 37% off its own highs. Adding insult to injury it acted very poorly today on a very strong tape as it fell by 4.4% and is now on its first 4 session losing streak since last October. Since December '16 it has traded between the round 30 and 60 numbers and should it test the low end of the range in the near term there is a good probability it may not hold.

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Multiple Looks at an Energy Leader EC

Energy has been trying to reassert itself lately, but overall it is still a laggard. The XLE is lower 5 of the last 8 weeks and is down 15% from most recent 52 week highs as the tug of war between bulls and bears is ongoing at its 200 day SMA. The ETF is dominated by XOM and CVX, but underneath the surface their are some names that are behaving bullishly. Today we look at an international play from Colombia, EC, and how long term investors could have been adding on STRENGTH, not weakness, over the last few months.

This is how EC was presented precisely in our Thursday 12/14/17 Game Plan. The first thing that sticks out is how the round number theory, with the ten figure came into play. The pattern was nearly two years long and the bigger the base the greater the space.

Stocks that can be bought after recent breakouts above WEEKLY flag bases are ECEC is a Colombian energy play higher by 41% YTD and over the last one year period and sports a dividend yield of 1.2%. Earnings are mixed with gains of 2.1 and 6.4% on 8/9 and 5/12 and losses of 3.2 and .8% on 11/8 and 3/6. The stock is higher 15 of the last 17 weeks (week ending 9/29 lost just 6 pennies) and by 5.1% this week thus far. It broke above a long bullish ascending triangle nearly 2 years in length that aligned with very round 10 number (weeks ending 4/22-5/6/16, 6/10 and 6/24/16, 5/9/17 and 10/20/17 were above 10 intraweek but recorded no CLOSES above) the week ending 10/27 and this week broke above a bull flag trigger of 12.25. Enter EC at 12.50. (We wrote about this name in our Monday 10/30/17 Game Plan as it busted above a cup with handle trigger just above very round 10 number).

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Looking At Wounded Leaders

When evaluating the genuine health of the overall market one wants to keep an eye on the number and quality of breakouts. Additionally one should look for leading stocks to be performing well. We all now, until recently, that the big tech names like AMZN, NFLX and GOOGL carried a lot of the weight, but today we look at a couple different names that as of late have crumbled. Just below we will take a peek at BA and ABBV, rulers in their respective fields.

BA is an aerospace giant higher by 9% YTD and 81% over the last one year period and sports a dividend yield of 2.1%, yet is now a quick 14% off most recent all time highs. Earnings have been mixed, but the gains stronger as it rose 4.9 and 9.9% on 1/31 and 7/26 and losses of 2.8 and 1% on 10/25 and 4/26. To its credit it did CLOSE higher Friday, but it has now finished the last 8 sessions under its 50 day SMA since September '16. It is lower 3 of the last 4 weeks after the week ending 3/2 recorded a bearish engulfing candle at all time highs. It has advanced 16 of the last 18 months, but this month looks to be in all likelihood setting up to complete a bearish evening star candle, after a hanging man in February.

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