ChartSmarter Thursday Game Plan 3/8/18

Markets really impressed me Wednesday as they hit hit lower twice today and still fought back. That tells me the bulls still have some fight in them. Again it was the Russell 2000 and Nasdaq that led today, becoming a nascent theme and a good one, higher by .8 and .3% respectively. The Russell 2000 tends to be streaky when it has energy, with a 15 session winning streak in November '16 and it rose 15 of 18 last October too. The S&P 500 is creeping up on its 50 day SMA and the Dow CLOSED 300 handles off its intraday lows. The VIX is now on a 4 day losing streak and looks ready to test its 50 day SMA for the second time in 7 days, and the more that line is touched, in my humble opinion, the more likely it is to break. The very round 20 number is now becoming a thorn in its side. Gold was looking as if it was constructing a nice double bottom base after yesterdays break above its 50 day SMA, but todays move just back below the 50 day after one day above dampened the prospect.

Looking at individual groups there was some big separation between the leaders and laggards with technology and healthcare gaining ground and they were pretty good actors even as the markets sold off hard early in the session and again around lunchtime, only to CLOSE firm. The XLK and XLV advanced higher by .5%. The XLK is now on a 4 session winning streak, although volume has dropped with each successive day and it is grappling with former highs made in late January. Weakness was seen in the staples and energy group and it is another example of whats in motion tends to stay in motion, both to the up and downside. The XLE was lower by .7% Wednesday, and this ETF is very heavily weighted with XOM and CVX comprising almost 40% of the fund. It obviously did not help to see XOM trading so fragile now 17% off most recent 52 week highs and the 2 weeks ending between 2/2-9 fell more than a combined 15% and today looks like it broke below a sloppy flag. Nothing to do on the investment side here, but just an observation.

They say a rally is not for real unless the financials are participating. They are the third best performing S&P sector YTD up nearly 3%, behind just discretionary as retail has made a comeback and technology with the XLK up more than 7% thus far in 2018. Below is the chart of MC and how it appeared in our Friday 2/23 Game Plan, and importantly it has solid acting peers in PJC and OPY to name a few (PJC was stopped cold at the very round par number the first couple days in February but looks ready to reclaim its rising 50 day SMA). Talking about the very round numbers MC is looking to record a ninth consecutive weekly CLOSE above the round 50 figure. Its chart trades very taut and it has not CLOSED underneath its rising 50 day SMA in six months now. Take advantage of any weakness back toward to 50 day SMA to accumulate shares.

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Past and Present View on FBR

We like to employ as few strategies here at ChartSmarter to keep it simple, but one thing we constantly do is focus purely on PRICE action. It must confirm the trigger on a CLOSING basis. We are big proponents of round number theory, ascending triangles and gap fills and today we look at an example of entering with a buy stop above the 50 day SMA. This was a unique example as we like the line to be upward sloping at the time of entry, but this name was in a strong uptrend, as it has now tripled from the lows dating back to the week ending 8/20/16, so the risk/reward was there. Often it will offer an additional buy point and FBR broke above a double bottom trigger as well of 16.72 on 1/22. Below is how we looked at the name in our Wednesday 1/3 Game Plan and then the second chart will offer a current view on the stock.

Stocks that can be bought as they take out the their 50 day SMAs and added to through future valid base triggers are FBRFBR is a Brazilian paper play higher by 54% over the last one year period and sports a dividend yield of 1.4%. Earnings have been mostly lower with three straight losses of 2.9, .4 and 7.7% on 7/25, 4/26 and 1/31 before a recent gain of 6.1% on 11/9. The stock is higher 3 of the last 4 weeks, but to be fair it fell 6 of the 7 prior to that including a 15% slump the weeks ending 11/24-12/1. It held the 14 number nicely about one month ago, important as that was stiff resistance through most of 2015. Enter FBR with a buy stop above its 50 day SMA at 15.25 and add to above a double bottom trigger of 16.72.

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ChartSmarter Wednesday Game Plan 3/7/18

Markets put in a nice showing Tuesday with good gains in the Nasdaq and Russell 2000 as they rose .6 and 1% respectively. We know their is a risk on appetite when they outperform and they are often leading indicators. The Russell 2000 is now back above its 50 day SMA and prior bull flag trigger of 1550 and once could make the argument that it was a bear trap on those who were stopped out on the breakout, but it is now 4% off lows made on 3/2 when it bounced off the round 1500 figure. The Dow and S&P 500 are in the early stages of carving out symmetrical triangles which could break either way, but they still reside below their 50 day SMAs currently. The Dow could get a lift from some higher priced components, as it is a price weighted index, with MCD and HD now 15 and 13% off their most recent 52 week highs. Neither has participated in the overall comeback and that heaviness could be a reason to avoid those names alone.

Looking at individual sectors bulls were happy to see the defensive groups at the bottom of the leaderboard with the staples, energy, healthcare and utilities being the only of the major S&P sectors to retreat or advance ever so slightly. The XLU slipped 1.4% and continues to be rejected at the very round 50 figure which remember is the area where a bear flag broke down in early February, a week BEFORE the overall markets slipped hard. Leading the way Tuesday were the materials as aluminum plays shined. AA is now well below a nice looking cup base breakout trigger of 50.41 taken out on 12/27 (base did trade nicely around the 40-50 numbers). Speaking off the very round numbers FCX is approaching the 20 figure which it was above intraday on five separate occasions in January, but had zero CLOSES above the number. Not to be ignored the cyclicals made their presence felt Tuesday with the XLY higher by .7% on the back of some nice retail showings from SFLY BBY OSTK and FIVE to name a few.

Technology remains hot and heavy and many keep pushing out the idea that the FANG names are doing the brunt of the lifting on the Nasdaq. Sure they are doing a great deal but it would be unfair to some secondary names that really are excelling. Below is the cloud play NTNX, and how it appeared in our Monday 3/5 Game Plan. Last Friday it CLOSED one penny below a 38.90 cup base pivot point and since then has taken off. It has advanced this week to the tune of almost 14% and foreshadowing may have come from the stock gaining ground the week ending 2/9 as the Nasdaq swooned lower. I have always been a big fan off names that shrug off overall market weakness and it is often a tell going forward, that they will impress mightily once the benchmarks catch their footing. On the weekly chart, below is the daily, the stock is now honing in our an additional buy point through a cup base trigger of 46.88 in a pattern 17 months long that began the week ending 10/7/16. That was just its second week after going public.

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ChartSmarter Tuesday Game Plan 3/6/18

Markets registered a solid start to the week with the Dow leading the way higher by 1.4% as CAT put up a reputable gain of more than 3%. Interesting to see just 7 of the 30 names in the index up YTD. The Nasdaq put up its third consecutive decent Monday start after a dismal 3.7% slump on 2/5. It produced advances 1.6 and 1.1% on 2/12 and 2/26 (2/19 was off for Presidents day) and today gained 1% making its three consecutive 1% plus Monday jumps. Of course the old saying its not how you start but how you finish so lets see how the week turns out, but the beginning today was very respectable. AAPL will have a big say in how the Nasdaq acts going forward and it has traded between the round 150-180 figures and the base still has a V shape to it, unattractive, and now it is forming a handle on that pattern. In 2018 it has traded above the 180 number, but has recorded no CLOSES above so that certainly remains the line in the sand. AMZN was presented with problems at the round 1500 figure and was able to recoup that number convincingly today after finishing just .25 above last Friday.

Looking at individual sectors all of the major nine S&P sectors advanced Monday with an interesting 1/2 combo as the utility and financials sectors led with the XLU up 2% and the XLF gaining 1.4%. These two often act in an inverse fashion, but what seems normal in this recent market place. Lagging were the traditional other defensive groups as healthcare and the staples still rose as the XLV and the XLP added .9%, not to shabby for weak groups on the day. Technology via the XLK followed through nicely after touching its 50 day SMA last Friday and recording a bullish piercing line candle. It is the one of two major S&P groups above its 50 day SMA, with the XLY CLOSING just above the important line today. That tells me if this rally has some legs it could have more room to stretch out and run as it would be much more healthier to have more ETFs swimming above that line.

The casual dining space has been weeding out losers, and as Buffett says one can often see whose pants are down when the tide goes out. MCD and PLAY were two former best of breed names now suffering from indigestion, pun intended. MCD is now lower 4 of the last 5 weeks and by 15% off most recent 52 week highs after trading tight as a drum in a uptrend for more than a year the weeks ending between 1/13-17/1-26/18. Below is the chart of BLMN and how it appeared in our Wednesday 2/28 Game Plan. The weekly chart shows it having room to the 26-27 area which was stern resistance in June-July and November-December '13, February-March '14 and January-March '15. It successfully retested a double bottom trigger of 22.49 taken out on 2/22 on 3/1 and filled in a gap from the 2/21 session creating a "cluster of evidence" which a couple or more indicators come into play in the same area. It now sports a bull flag formation and look at add to or start a position above a 24.25 trigger, a breakout that carries a measured move to 28.50.

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ChartSmarter Monday Game Plan 3/5/18

Markets completed a tumultuous week Friday with some bright spots as the Russell 2000 which was the best performer Thursday did so again on Friday up a very strong 1.7%, bouncing off the round 1500 number for a second consecutive day, and recording a bullish engulfing candle. The Nasdaq rose 1.1% and CLOSING above its 50 day SMA after being 100 handles below the line in the early going. On the weekly basis the Nasdaq and Russell 2000 fell 1.1 and 1%, the S&P 500 by 2% and the Dow by 3%. The Nasdaq still comfortably maintains its YTD advantage higher by 5.1%, with the Dow, S&P 500 and Russell 2000 all hovering at the UNCH mark. All of these major indexes have work to do after the recent damage and time is a necessary ingredient, but there are a plethora of individual names that are weathering the storm well and should be applauded for it. I am keeping a closer eye on the VIX these days and the last 2 sessions finished 10% off intraday highs and Friday registered a bearish engulfing candle.

Looking at individual groups it was healthcare and technology that did the best higher with the XLV and XLK up in the 1% vicinity. The XLK recorded a bullish piercing line pattern off its rising 50 day SMA and the chart still looks somewhat dubious after the Tuesday-Thursday sessions produced a bearish three black crows formation with volume increasing with each successive day. It has the failure prone V shaped cup base and a double top in the 69s to deal with too. Lagging Friday were the utilities, materials and industrials with all three CLOSING in the red. The utilities are still dealing with the very round 50 number which coincided with a bear flag trigger that began last December. The XLU lost 2.8% on the week and CLOSED every day this week in the lower half of its daily range. On a weekly basis every major S&P sector lost ground with technology via the XLK acting the "best" lower by .9%. On the flip side the only other groups to fall harder than the utilities were the industrials and materials off by 3.2 and 3.8% respectively.

Healthcare names have been under some duress as of late with the XLV down 9% from its most recent 52 week highs. Of course there are many subsectors within including pharma, biotech, medical devices, etc. Below is the chart of JNCE and how it appeared in our Friday 3/2 Game Plan. This recent IPO just turned one year old last month and it has made a nice turnaround even being 26% off its most recent 52 week highs. The stock rose 6.3% on Friday touching the very round round 20 number for the second consecutive session recording a bullish engulfing candle right off its rising 50 day SMA. The stock REPORTS earnings next Friday and I believe CELG has interest in the name and the way it has been performing it could it on the stocks radar. One should never invest with the hope of an acquisition, but technically this chart looks sound with good risk reward here. On its weekly chart one can see the visually appealing cup with handle pattern that began the week 5/5/17 for longer term players like I am to add to one stake above a 26.65 trigger.

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