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ChartSmarter Friday Game Plan 11/17/17

Markets did something unusual for the very short term, as they started strong Thursday and one was most likely thinking it would not hold and what did it do? As usual they confounded the most. I have to admit I came away impressed as I thought we would see some softness into the close and there was none of it. Bears had to come away from today scratching their heads. I have been keying most of my positive sentiment on the bull flag breakout of the Russell 2000 which in all frankness never really materialized. It did retest its cup base breakout just above the 1450 number and has not done much wrong and today recaptured its 50 day SMA which is still sloping upwardly firmly even with its recent selloff. The small cap benchmark rose 1.6% Thursday and perhaps most impressive was its shrugging off the financial weakness today as they are a very large weighting in the index.

Looking at individual sectors it was an interesting pair at the top of the performance tables with technology and staples stepping out. The XLK rose by 1.4% certainly helped by some "old tech" plays as CSCO and NTAP both impressed with positive earnings reactions of 5.2 and 15.9% respectively. The old dogs can still teach some of the new pups some tricks as one just needs to take a quick peak at the charts of VMW, RHT, ADBE or INTC just to name a few. The XLK has the look of a nice short flag that began near the 60 number and a move through 64 would be a breakout, and one must admire the taut action it has displayed as the last 2 weeks have both CLOSED within just one penny of each other. Lagging on a strong session today, and to be taken seriously were the energy, utilities and financials. I had made a call recently thinking energy travails were behind it and clearly I look WRONG. Utilities were lower as well by .3% after Wednesday dark cloud cover candle. Stay tuned.

Retail names have been showing some resilience recently, of course there will always be winners and losers but names that reported this morning that witnessed very energetic moves were RH which screamed higher by 25.9% and is now near all time highs made in November '15 which would be a cup base, but the depth of the base has me uninterested as there are better names to play. WMT had an extraordinary session advancing 10.9% trading at all time highs and just below the very round par number, and is almost assured of a 7th weekly gain in a row tomorrow. BBY and LB both finished lower, but recorded nice reversals intraday, finding support at their 200 day SMAs. Below is the chart of NKE and how it appeared in our Thursday 11/9 Game Plan. The last 3 weeks have digested the 9.5% jump the weeks ending 10/20-27 and broke above a nice bull flag pattern which did find support at its 200 day SMA. It looks poised to travel to the round 60 number which has been resistance the week ending 8/26/16 and again the 6/30-8/17. First it will have to power above an upside gap from the 8/17 session. Will it just do it?

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ChartSmarter Thursday Game Plan 11/16/17

Markets once again finished well off session lows, but again lacked achieving much headway. The Nasdaq which at its worst slipped more than 1% in the first half hour ended up down .5%, a lukewarm showing. It just feels uneasy, heavy, but making investment decisions based on gut feelings are very hazardous and should never be done. Almost feels like a game of musical chairs is taking place and the end of the game is almost upon us. On the bright side, give the tech heavy benchmark credit as it has CLOSED at or in the upper half of the daily range the last 6 days, albeit today fractionally so. Sure it would be nice to see a 1% advance in firm trade and it may just do that soon as the markets do a very good job to confound the most. The Russell 2000 recorded yet another bullish hammer candle, but again finished underneath its 50 day SMA for a second straight day, but did register a successful retest of a cup base breakout above 1452 taken out in September.

Looking at individual sectors it was the groups that have been sturdy lately that took a pause, that being the staples and utilities. The only space that acted worse was energy as its spillover continues, pun intended. The XLE lost 1.1% and for the week is off 3.3% and if that holds would be its worst week so far in '17 (has the look of a weekly bearish evening star pattern too). That is exactly the opposite type of action you do not want to see after a recent breakout, as the best ones tend to work out right away. The XLU and XLP fell .9 and 1.1%, and although the XLU is still above its recent cup base breakout trigger of 56 it did record a bearish dark cloud cover candle today, at all time highs. Acting well today were the financials with the XLF gaining .25%. The ETF is spooning its 50 day SMA not long after a flag breakout on 10/20, but is below the 26.50 pivot.

On soft sessions like Wednesday it can pay future dividends to see which names acted well in the heat. Sure there has been a push toward more defensive names, and trends can last longer than we think as we know. Below is the chart of TSN which we profiled in our Wednesday 10/25 Game Plan. The name is on a 4 session winning streak and has advanced 13 of the last 18 weeks, and perhaps even more impressively has gained 2.8% this week heading into Thursday. Leading names will often give investors a few chances to get in on the way up and Tyson is no exception. The flag breakout has a measured move to the 80 number, but a look on the weekly chart shows a 14 month cup base pattern now with an add on above a 77.15 trigger in a pattern that began the week ending 9/9/16. A move above that pivot would achieve an all time high and make for a tasty trade, pun intended.

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ChartSmarter Wednesday Game Plan 11/15/17

Markets once again shrugged off some early weakness, to go out near highs for the session, but still finished in the red. The Dow and S&P 500 recorded bullish hammers, and the Nasdaq was able to cut intraday losses more than in half. The Russell 2000 ended well off the days lows, but CLOSED underneath its 50 day SMA for the first time in two months and this could well be a simple bear trap. The Nasdaq looks decent as it could potentially register a three week tight pattern this week, at all time highs, with the last 2 weeks ending within just 14 handles of each other. The big 2.2% gap up on 10/27 is holding firm, with just one CLOSE underneath on 10/28, and that by just just 2 handles. Many say profitable trading should be boring, and that is just what is taking place here as the major indexes grind higher. Keep in mind since 1950 the S&P 500 has averaged a 2.2% advance in the month of November and gained ground 72% of the time, h/t @ariwald. It is essentially UNCH so far this month and looking to burst above its own three week tight pattern as the last 3 have all CLOSED within just 7 handles.

Looking at individual sectors there was some obvious bifurcation with the very conservative utilities and staples putting on a show. One has the right to question whether their emerging strength is investor repositioning into more defensive spaces, which is becoming increasingly more likely than the thesis I brought up not to long ago as them giving other groups a breather. The XLU and XLP advanced 1.2 and .3%. The XLU is now in overbought territory above the 70 RSI figure for the first time in nearly 6 months, and take it with a grain of salt as it could easily continue to power northward. The XLP on the other hand has been charging higher as well, and has recaptured its 200 day SMA, but I am a bit skeptical although I did see an article in Barron's recently that highlighted limited exposure to the group. That alone could provide the fuel for growth into the ETF. On the flip side energy and materials saw weakness with both the XLE and XLB falling 1.7 and .9%.

Energy has captured plenty of headlines in recent months, and for good reason. It could be a barometer of global economic growth. As we like to say, we pay close attention to names that were former best of breed in their space, and we want to monitor how they behave once the group begins to receive some love. Below is the chart of PXD and how it appeared in our Thursday 11/9 Game Plan. This name was once a general in the space, but has since lost its way. Compare the distances between it and former peer stalwart EOG. PXD now trades 24% off its most recent 52 week high while EOG is just 6% from its own. We are simple technicians and will leave the why to others as PRICE is our only compass. PXD has encountered difficulty as it recently filled in a gap to the upside from the 8/1 session which aligned with a downward sloping 200 day SMA which created a "cluster of evidence". Investors should be wary until this former giant can reclaim its 200 day. Until then keep it in the penalty box.

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ChartSmarter Tuesday Game Plan 11/14/17

Markets are extended a bit no question, but that does not mean they can not achieve greater heights heading into the strong seasonality year end. Keep in mind holiday shortened weeks normally lean toward the bullish angle so not this week but into Thanksgiving the following week we can see some grind higher strength. The major indexes have been demonstrating some classic bullish behavior starting on lows and going out on their highs and today was no exception. The bears seem to have the bulls on the ropes but just can not manage to record any follow through. Sure the gains today were modest at best, but they did fend off early weakness. The Russell 2000 which I like to focus on did register yet another nice long lower tail resembling a dragonfly doji Monday as the tug of war continues at the rising 50 day SMA as bull and bears dig in deep there.

Looking into individual sectors it was a defensive flavor once again to start the week with the utilities and staples garnering most of the attention. The XLU was the best performer rising 1.2% followed by the staples with the XLP putting up a respectable .6% advance. The XLU broke above a cup base trigger of 56 Monday, although the cup is a bit V shaped which does tend to be failure prone. The ETF is looking for a seven week winning streak this week and put in a decent start (the prior 6 rose by a combined 4.4%). The XLP is seeing a nice move with 3 of the last 5 sessions recording a move better than 1%. Lagging today were the energy and industrials with both losing .6 and .3%. I see many targeting weakness going forward in the energy space, but the XLE has risen 9 of the last 12 weeks and 7 of those 9 up weeks rose by more than 1% and to me that is some silent accumulation occurring.

Materials have behaved in a decent manner recently. Looking at the XLB it recorded a bullish engulfing candle right off its upward sloping 50 day SMA Monday for its initial time after a recent break above a cup base trigger of 56.02 on 9/17. That is often an excellent opportunity to initiate or add to one position. Peering into individual names in the arena below is the chart of TECK and how it appeared in our Wednesday 11/1 Game Plan. This name is still 18% off most recent 52 week highs, and we do like to buy strength normally but this name bounced right off the very round 20 number on 10/27 producing a bullish counterattack candle. It has since recaptured its 200 day SMA and today battled with its 50 day and had issues CLOSING above. A double bottom pattern is taking shape and a peek on its weekly chart shows a history of trouble near the 26 level. It touched that number last November and December and again this January and February. This is a name to keep a close eye on heading into the first quarter of next year and possibly beyond.

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ChartSmarter Monday Game Plan 11/13/17

Markets were challenged this week by the bears, but they came out for the most part unscathed. For the third consecutive week the Nasdaq outperformed the S&P 500 and Dow, as if fell .2% and the S&P 500 lost .21% so it was by the slimmest of margins, and it rose for a NINTH consecutive Friday, albeit fractionally. The Dow lost .5% but has now completed a 3 week tight pattern as the last three have all CLOSED within just 113 handles of each other. For all the noise the Nasdaq ended the day at or very near the top of its daily range 4 out of 5 days, a bullish trait. The wall of worry is becoming a bit more uneasy as the Russell 2000 which is often a leading indicator was the outlier for the week dropping 1.3%, falling in tandem with financials which are heavily weighted in the benchmark. Its upward sloping 50 day SMA was tested Wednesday-Friday this week and held firm, for now. The JNK lost .9% for the week, and is now on a 3 week losing streak, in the largest weekly volume since the week ending 7/1/16. Good news is that 4 week losing streaks are rare. The caveat being the last time a 4 week slump occurred between the weeks ending 10/30-11/20/15 it went on to drop 8 of the next 12 weeks.

Looking at individual sectors it was the staples that put up the best showing with the XLP higher by 1%, registering its third such gain in the last 4 days. On a weekly basis it rose 2.1% tying its best weekly gain thus far in 2017 with the weeks ending 1/20 and 5/26, and it was easily the best weekly performer too. That leadership could be questionable but the ETF is right at 200 day SMA resistance and the fund did record a death cross earlier in the month. Other noteworthy weekly moves among the major S&P sectors were the financials slipping 2.6% the worst actor. The XLU rose .5% and is on a 6 week winning streak and with the staples strength the flavor was risk off. A group that should be watched closely is the industrials which are quietly losing ground as the XLI is now on a 3 week losing streak losing 2.7% although volume has been tame and it could just be gently retesting the cup base breakout trigger of 69.68 taken out on 9/18.

We all know just how powerful the recent overall tech surge has been, most notably with the semiconductors. Other groups that deserve just as much credit are the homebuilders. The ITB for one is at 10 year highs, gaining 10 of the last 11 weeks and CLOSING above the round 40 number this week, but still attempting to negate the bearish engulfing candle from the 11/2 session. It certainly pays to look deeper when you have robust moves with the pure plays and below is an example of a periphery play and the chart how it was profiled in our Tuesday 10/24 Game Plan. It CLOSED above the 63.25 bull flag trigger on 10/27 and after reporting earnings this Wednesday recorded an admirable bounce almost precisely off the round 60 number and the last 3 days of this week surged more than 11%.

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.

Stocks that can be bought after recent bullish engulfing candles are TDC. TDC is a technology play higher by 30% YTD and 34% over the last one year period. Earnings have been mostly higher and energetic with gains of 11.3, 8.5 and 8.5% on 11/2, 7/27 and 2/9 and a loss of 8.2% on 4/27. The stock registered a bullish inside week losing 2% this week after a robust combined advance of 10.7% the 2 weeks ending 10/27-11/3. It recently broke above a bullish inverse head and shoulder formation near 33 in a pattern that began the week ending 9/2/16. TDC recorded a bullish engulfing candle on 11/8, coming close to filling in a gap from the 11/1 session and enter at 34.75.

Trigger TDC 34.75.  Stop 33.

Stocks that can be bought as they pullback into recent cup base breakouts are RRR SU. RRR is a casino/gaming play higher by 14% YTD and 22% over the last one year period and sports a dividend yield of 1.5%. Its most recent earnings reaction was its first gain in its last 5 rising by 7.1% on 11/8 and the prior four all lost 3.6, .1, 3.4 and .5% on 8/9, 5/5, 3/8 and 11/8/16. The stock is higher 5 of the last 6 weeks and this week surged by 7.2%, its second best weekly return since coming public in April '16 and volume was very cooperative too. RRR broke above a cup base trigger of 25.04 on 11/8 and enter on a pullback into move at 26.

Trigger RRR 26.  Stop 24.60.

SU is a best in breed energy play from our neighbor to the North higher by 11% YTD and 25% over the last one year period and sports a dividend yield of 2.8%. Earnings have been very well received with FIVE consecutive positive reactions advancing 1.9, 1.7, .2, 2.7 and 5.6% on 10/26, 8/2, 4/27, 2/9 and 10/27/16. The stock is on a 3 week winning streak which rose by a combined 9% and broke above a long bullish inverse head and shoulders formation trigger of 34 the week ending 9/15/17 (the pattern began the week ending 11/28/14 and the head was created between weeks ending 4/24/15 and 12/16/16). SU is on a current 12 session winning streak and broke above a cup base trigger of 35.28 on 11/6 and enter on a pullback at 36.

Trigger SU 35.90.  Stop 34.

Stocks that can be bought as they fill in gaps are COF. COF is a finnie play UNCH YTD and 10% over the last one year period and sports a dividend yield of 1.8%. It has nice earnings momentum with back to back gains of 1.4 and 8.5% on 10/25 and 7/21 after losses of 2.9 and .4% on 4/26 and 1/25. The stock is higher 6 of the last 9 weeks, but did fall 4.9% this week and is back near a breakout from a cup with handle breakout trigger of 88.09 trigger on 10/20. It was unable to break above a flag pattern that began with nice support at 200 day SMA on 10/13, and a good example to wait for PRICE confirmation. Buy COF here with gap fill from 10/19 session.

Trigger COF here.  Stop 84.

Stocks that can be thought of as shorting opportunities are RDFN. RDFN is a recent real estate related IPO lower by 4% since inception in late July and now 38% off most recent 52 week highs. Earnings in short supply but only two instances fell by 5 and 9.8% on 9/8 and 11/10. The stock is lower 6 of last 7 weeks beginning with bearish engulfing week ending 9/29 that fell 10.3%. It registered bearish reversals on 8/3, 8/16, 9/25 and 10/18 lost 12.4, 4.9, 7 and 3.4% in active volume forming top line in descending triangle. Enter RDFN as a short with a sell stop below very round 20 number at 19.75 which carries a measured move to 7.

Trigger RDFN 19.75.  Buy stop 21.20.

Good luck.

The author is flat.

Trigger summaries:

Buy stop above bull flag pattern BIG 54.  Stop 52.10.

Buy after recent bullish engulfing candle TDC 34.75.  Stop 33.

Buy pullback into recent cup base breakout RRR 26.  Stop 24.60.

Buy pullback into recent cup base breakout SU 35.90.  Stop 34.

Buy after recent gap fill COF here.  Stop 84.

Sell stop to short below bearish descending triangle RDFN 19.75.  Buy stop 21.20.

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