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ChartSmarter Tuesday Game Plan 11/28/17

Markets took a pause after a decent holiday shortened week on Monday with the major averages hovering around the UNCH line. The Dow, S&P 500, Nasdaq all finished up or down within just .2%, and the Russell 2000 falling .4%. The Russell 2000 has been trading very taut the last 3 days after the prior 4 rocketed higher following the 11/15 bullish hammer candle. The Dow Industrials are flirting with all time highs and on an RSI basis has clipped off nearly 40 handles, a good sign after hitting the very round 90 figure in October. The Nasdaq which rose 1.6% and everyday last week recorded a spinning top candle Monday, but lets keep in mind that candles have been much better at calling bottoms than tops. The S&P 500 managed to CLOSE above the round 2600 number for a second consecutive day and that is a bull flag breakout which carries a measured move to 2700. It did register a spinning top candle Monday and that could portend a stalling of the previous trend which is obviously upward, but lets give these markets the benefit of the doubt as trends are more likely to persist than reverse and seasonality factors are on the bulls side.

Looking at individual sectors it was the utilities that led with the XLU higher by .4% and the ETF is now on a 4 session winning streak but volume has been putrid, although of course we have witnessed a holiday where trade is subdued. It is looking for an unusual 9 week winning streak and now within the bearish shooting star weekly candle the week ending 11/10. Energy lagged with the XLE dropping 1% with the week ending 11/17's drop of 3.2% looming large. Five of the nine major S&P sectors CLOSED up or down within .2%. The IBB lost .7% on Monday and it is trading near its 200 day SMA which it briefly undercut on 11/14 and that lasted just 2 sessions before it recaptured the long term line. The ETF has declined 5 of the last 7 weeks and heavy volume down sessions on 10/26 and 11/17 slipped 2.3 and 1.6% on double normal daily trade. This is just a prediction so take it with a grain of salt but it looks to me like the right clavicle of a bearish head and shoulders formation is building. The neckline is just above the round 300 figure but could trade to the round 330 number which was the top in the left shoulder into the near term.

One would have to been in some serious hibernation not to have noticed the strength in the homebuilders as witnessed in the ITB. The homebuilder ETF has advanced 52% YTD and is higher 12 of the last 13 weeks, and looking back even further has gained 32 of 46 weeks so far in 2017 and 7 of the down weeks fell less than 1%. The powerful narrative in the space has lifted other periphery plays like the recreational play WGO. The stock is higher 19 of the last 26 weeks, more than doubling since the week ending 6/2 and really demonstrates that consumers are paying for experiences. They may have become a bit more picky in the spending habits, however they will shell out cash for certain things. Below is the chart and exactly how it appeared in our Friday 9/22 Game Plan and it has acted very well POST breakout from the 39.40 on 9/14, with that round number resistance dating back 13 years. That is a major breakout and for those who missed, the trigger was NOT hit and reminds me of a favorite saying from a friend Jon Boorman, if you are looking to hold long term do not worry about a few cents here and there. It is like trying chasing a bar of soap around the bathtub. A logical entry would now be a pullback just above the very round 50 figure, which should provide somewhat of a smooth ride, pun intended.

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ChartSmarter Wednesday Game Plan 11/22/17

Markets put in a robust move Tuesday with the Nasdaq leading the way. It jumped 1.1% and more importantly recorded its second gap up, a rare event for an index, in the last 4 sessions. Not to be outdone the Russell 2000 which has been on a tear roared past a 1510 double bottom trigger gaining .1%. Is the benchmark about to go on another tear similar to last November and this August-September? I have no idea and if anyone tells you with certainty label them a charlatan. It has been following certain patterns and keep in mind this index is often seen as a leading indicator. The S&P 500 was hampered by the round 2600 number, a little like the 2500 number did in mid September. It has now formed a bull flag formation and a move through the 2600 figure will have a measured move of 100 handles.

Looking at individual sectors Tuesday it was a broad rally as all nine of the major S&P sectors advanced. The best performing group was technology with the XLK rising 1%. The healthcare group which has been under pressure as of late was not far behind with the XLV up .9%. Peering deep into the cyclical group into the retail names, they were the only subsector that was meaningfully lower with the XRT falling more than 1% and shying away from a break above a bullish inverse head and shoulders formation with a neckline near 42. Some names in the group imploded after earnings reactions today with SIG and DSW off 30.4 and 13.2% respectively. But their has been some real bright spots recently in the arena including WMT, KORS, BURL, CRI, PLCE and URBN which we profiled recently in this piece. Perhaps we will look back at the newly minted ETF, EMTY and say this was one of the most ill timed creations as it called the bottom in this space. The ETF is designed to track the demise of the retail store.

We have spoken at length about the strength in "old tech" names. As in all markets some names will out or underperform and today we look at a name that lagged, and coming into today was 14% off most recent 52 week highs. It was weighed down by one very nasty drop following an ill received earnings reaction this summer. Sometimes these are a one off situation and the chart below may be a good example of that. The stock has gained ground 4 of the last 5 times following an earnings release, but the one miss was a real doozy perhaps frightening investors. It slumped 18.5% on 8/3, but rebounded firmly on 11/2 adding more than 8% and is now looking for a 5 week winning streak higher by more than 4% this week already. On 11/2 it also recaptured its 200 day SMA which it had been below for 3 months and then retested that line last week and held firm. The pivot was never hit, but an alternate entry point would be above an unorthodox cup with handle trigger of 17.60.

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ChartSmarter Tuesday Game Plan 11/21/17

Markets began the holiday shortened week in lukewarm fashion. The big three major indexes were near the UNCH line, the Dow ended up .3%, but it was the Russell 2000 that once again proved formidable advancing .7%. Of course this renewed strength is nascent, but the pause was well deserved. It recorded a couple of giant moves after the election late last year and this August-September. The good sign was the action between 11-8/15 which witnessed nearly every session CLOSE near highs for the day after early softness and within reach of its still upward sloping 50 day SMA. It recaptured the round 1500 number Monday and is now honing in on the 1510 level which would record a double bottom breakout if taken out. There was a good article in Forbes recently stating the concern over the high yield and S&P 500 correlation, but it rightly pointed out it was not as accurate as many pointed out. Its connection should be associated more with the Russell 2000 as high yield generally is sold by smaller cap companies.

Looking at individual sectors it was the financials, industrials and technology that were the best performers. The XLF continues to catch its breath along an upward sloping 50 day SMA. The subsector broker dealers behaved very well pushing the group higher as evidenced by the IAI. The ETF is illiquid, but the price action is undeniable. It has CLOSED the last 7 weeks all within just .50 of each other and this type of tight trade can lead to explosive moves, typically in the prevailing direction. CBOE has essentially doubled over the last year beginning at the round 60 number last October and is nearly touching the 120 figure. It has lost ground just 12 weeks so far in '17 and 8 of the 12 lost less than 1% and the other 4 lost no more than 1.8%. Lagging today were the utilities, energy and healthcare. The XLV is trading right at a bearish head and shoulders neckline of 81 and the XLE is not off to a good start following its 3.2% dump last week.

We did mention this weekend their were some bearish engulfing candles recorded at all time highs from tech heavyweights AMZN and GOOGL. Now keep in mind candlesticks act as warning signs and come secondary to PRICE action. If anything they could be used to trade around core positions and shave some long exposure. Perhaps one can add back stock that they shaved off on an AMZN for example on a retest near the cup base breakout trigger of 1083.41 taken out on 10/27. The same can be done with GOOGL where one can reenter near a gap fill at 1007 from the 10/26 session. Below is the chart of INTC and how it appeared in our Wednesday 11/8 Game Plan. The semiconductor giant recorded a bearish engulfing candle on 11/3 and did not participate in the groups strength Monday. Again it is suggested to repurchase as INTC did register the candle 20% above its rising 50 day SMA. Let it come to you.

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Best In Breed Retail

The retail group has come to life, after a long period of lying dormant underneath the Amazon effect. These events are overblown both to the upside and downside in general with an array of sectors and this space is no exception. The analogy you are never as good or as bad as you think comes to mind. It is always a good practice to avoid any meaningful long exposure to a weak group, as a rising tide with lift all boats in reverse. But keeping a list of former leaders on your radar can often prove fruitful as theses names will normally be the first out of the gate to score solid gains. Below are a few recent examples we profiled in the last month, and not included are stocks like ROST and BURL. ROST just burst above a 66.26 cup base trigger on 11/17, with two consecutive 10% gains after earning along with the 8/18 session, which could also be interpreted as a bullish inverse head and shoulders breakout. BURL smashed through a 101.73 cup with handle trigger of its own on Friday but REPORTS earnings this Tuesday before the bell.

In our Tuesday 11/14 Game Plan we looked at GOOS. The stock is now 5% higher than the highlighted entry and now firmly above its 24.42 cup base trigger and at all time highs. It rose 1.5% this week on the back of the prior week advancing more than 23% on more than double average weekly volume.

Stocks that can be bought after recent cup base breakouts are GOOSGOOS is a retail leader higher by 46% since inception this May and is now 4% off most recent 52 week highs. Obviously a very small sample size of earnings with 2 of 3 registering nice gains of 14.1 and 15.7% on 11/9 and 6/2 and a loss of 3.3% on 8/10. The stock is higher 8 of the last 11 weeks and the last 2 weeks alone jumped nearly 25% (week ending 11/10 advanced 23.1% on third best weekly volume ever). It has been acting well POST breakout from inverse head and shoulders trigger of 20.50 and on 10/25 was retested and held firm at round 20 number. GOOS broke above a 5 month long cup base trigger of 24.42 on 11/9 and enter here on pullback.

Trigger GOOS here.  Stop 23.30.

In our Monday 11/13 Game Plan we looked at BIG. The stock is on a 3 week winning streak and is now higher by more than 2% from the recommended entry. Look to add to this name if sector strength continues above a cup base trigger of 56.64 in a base nearly a year long. A breakout achieves all time highs.

Stocks that can be bought as they take out bull flag formations are BIG. BIG is a retail leader higher by 7% YTD and 23% over last one year period and sports a dividend yield of 1.9%. Earnings have been mostly higher with three consecutive positive reactions gaining 2.9, 3.8 and 1.2% on 5/26, 3/3 and 12/2/16 before a most recent loss of 1% on 8/25. The stock is higher 3 of the last 6 weeks with all 6 trading within the week ending 9/29 which scored a 8.2% advance. Look to enter BIG with a buy stop above a bull flag trigger of 54 which carries a measured move to 61. One can add to above a cup base trigger of 56.64 in a pattern nearly a year long that began the week ending 12/23/16.

Trigger BIG 54.  Stop 52.10.

In our Monday 10/23 Game Plan we looked at WMT. The stock is on a current 7 week winning streak and now comfortably above a long 91.07 cup base breakout trigger in a base that began the week ending 1/16/15. Not surprisingly it was stopped at the very round oar number this week but look to add to this name on weakness. It is now 12% higher than the recommended entry.

Stocks that can be bought after recent breaks above bull flag formations are WMTWMT is a best of breed retail play higher by 26% YTD and 28% over the last one year period and sports a dividend yield of 2.3%. Earnings have been mixed with gains of 3.2 and 3% on 5/18 and 2/21 and losses of 1.6 and 3.1% on 8/17 and 11/17. The stock is on a 3 week winning streak and this weeks flat finish has to be interpreted as very bullish after the week ending 10/13 jumped nearly 10% scoring its best weekly gain in years. It has acted well POST breakout from a cup base trigger of 82.09 on 10/10 and enter WMT here with todays break above a bull flag trigger of 87.25, which carries a measured move to 96.25. On the way to the measured move one can add to above a weekly cup base trigger of 91.07 that began the week ending 1/16/15.

Trigger WMT here.  Stop 84.75.

In our Friday 11/10 Game Plan we looked at LB. The stock is on a 5 week winning streak up more than 19% but still sits 33% off most recent 52 week highs. The bullish take on the chart is it is now nicely above a 200 day SMA which it was underneath for the last 22 months. It highlights the reason for using stops on a CLOSING basis as it was below the stop price intraday on 11/16.

Stocks that can be bought as they take out bull flag triggers are LB. LB is a recent retail standout but is still lower by 27% YTD and 26% over the last one year period and sports a hefty dividend yield of 5%. Earnings have been mixed with smaller gains of 2.7 and 2.5% on 5/18 and 11/17 and losses of 5.1 and 15.8% on 8/17 and 2/23 on 8/17 and 2/23 (it REPORTS on 11/15 after the close). The stock is lower by 36% off most recent 52 week highs but higher 8 of the last 11 weeks and up 3.3% heading into Friday. Last week rose 4.5% on the fourth best weekly volume of '17 so far. Enter LB with a buy stop above a bull flag trigger of 48.50 which carries a measured move to the gap fill on the upside from the 7/5 session.

Trigger LB 48.50.  Stop 47.

In our Wednesday 11/8 Game Plan we looked at EL and CRI. EL is now higher 25 of the last 32 weeks and sits just 2% off recent all time highs. The flag breakout could be retested and should offer a solid entry if it occurs. It is acting significantly better than names in the group like ULTA, ELF and SBH all of by 32, 38 and 44% respectively from their own 52 week highs.

EL is a best in breed consumer play higher by 60% YTD and 55% over the last one year period and sports a dividend yield of 1.2%. Earnings momentum show why its a leader with FOUR consecutive positive reactions higher by 9.2, 7.7, 4.4 and 2.6% on 11/1, 8/18, 5/3 and 2/2. The stock is higher 14 of the last 17 weeks and has acted well POST breakout from more than a year long weekly cup with handle trigger of 98.50 in a base that began the week of 5/6/16 and taken out the week ending 7/28/17. EL has now formed a bull flag trigger at all time highs and enter with a buy stop above 122.50 that carries a measured move to 134.

Trigger EL 122.50.  Stop 118.

CRI is on a 5 week winning streak up more than 12% and this name is now more than 5% above the cup base trigger which aligned with the very round par number. Look to add to this name above a cup base trigger of 112.68 in a base that began the week ending 7/29/16.

Stocks that can be bought as they take out the round numbers are CRI. CRI is a retail leader higher by 15% YTD and over the last one year period and sports a dividend yield of 1.5%. Earnings have been mostly higher with gains of 4.4, 2.6, 4.2 and 4.1% on 10/26, 4/27, 2/23 and 10/27/16 and a loss of 1.5% on 7/27. The stock is higher 9 of last 11 weeks and last profiled in Friday 9/15 Game Plan above bullish ascending weekly triangle which could also be interpreted as an inverse head and shoulders pattern. Enter CRI with a buy stop above round par number at 100.25 which would also move through cup base trigger of 99.85. One can add to above weekly cup base trigger of 112.68 that began week ending 7/27/16.

Trigger CRI 100.25.  Stop 96.60.

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ChartSmarter Monday Game Plan 11/20/17

Markets ended Friday lower going into a holiday shortened week and it was the Russell 2000 that captured traders attention today and for the week. The small cap benchmark rose .4% today and demonstrated nice follow through after Thursdays climb back above the 50 day SMA. For the week it outperformed the big three advancing 1.2%, followed by the Nasdaq rising .5% and the S&P 500 and Dow falling .1 and .3% respectively. On the Russell 2000 daily chart the 1510 level which was a prior bull flag pattern has now morphed into a double bottom, so key an eye on that level into year end. The Nasdaq had brief spurts into the green today, but the potential 10 Friday winning streak was not to be, but give credit for the fractional .15% loss after Thursday 1.3% gap higher. And it was the second gap up, rare for an index, in the last 3 weeks which is saying something. All the warnings from high yield last weekend, went away rather quietly toward the end of the week after Wednesday bullish counterattack candle. Volume was strong this week as the HYG rose .4%, but that cut in less than half of the prior weeks 1% drop. Perhaps its a bit early to take it off the crowded wall of worry list.

Looking at individual sectors today energy and cyclicals led the way, with the XLU and XLY up in the neighborhood of .5% and lagging somewhat surprisingly were technology and the utilities. A look on the XLK weekly chart however shows constructive action as this weeks slim loss of .2% ended a 7 week winning streak, but has set up a nice 3 week tight pattern as the last three have all CLOSED within just of 15 cents of each other. Looking at all the groups on a weekly basis moves were somewhat muted with just 2 of the 9 major S&P sectors gaining or losing more than 1%. Glaring was the XLE slumping 3.2% and bulls have to dig in right here. The industrials, via the XLI, have now registered their first 4 week losing streak in 18 months, and the combined of muted drop of 3.5% almost equals the XLE weekly loss, and bulls can point to volume each of the last 4 weeks being lower than the average. The XLV is taking the look of a bearish head and shoulders pattern here and the right clavicle has formed below the 50 day SMA which is beginning to slope lower.

The defensive staples and utilities groups are not the only spaces that have been acting well as of late (the XLU did rise .5% this week but did record a bearish shooting star candle at all time highs). We have all read about the need for protein as the population will keep growing at very rapid clips internationally, and many around the world will enter the middle class and will look to step up their diet. We spoke last week of the strength in TSN and this Thursday it broke above a 77.15 cup base trigger in a pattern 14 months long. Below is the chart of peer PPC and how it was profiled in our Thursday 11/2 Game Plan, and it is always important to make sure fellow competitors are acting well and you name is not the only one in the group carrying the heavy load. PPC is now higher 16 of the last 19 weeks and perhaps most impressive was this weeks gain of 1.4%, AFTER the prior week screamed higher by 10%. It has now sprung clear of the round 30 number and this name is behaving anything but conservative and has traveled half way now to its measured move.

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