ChartSmarter Wednesday Game Plan 2/5/14

Markets rallied somewhat on Tuesday a day after yesterdays clobbering. They did not come close to making a dent into Mondays heavy losses and volume was inadequate. The Nasdaq gained .9%and S&P 500 rose .8%. The Nasdaq looks as if it could rally another 1.5% into 50 day resistance. Leading sectors today were just what you would like to see from a healthy rally with financials leading the way. The XLF rose 1% today after finding bids near the round 20 handle and 200 day SMA. Damage has been done to the chart with 3 consecutive down weeks losing 4.5%. Volume has been very heavy on the downside, with 1/24’s slicing of the 50 day in almost double average daily trade. Mondays thrashing of 2.5% came in the largest volume in over a year. BAC in the group still looks the best to me as it is a rare one that remains above its 50 day and trades north of its previous 16.08 flat base trigger it took out on the first trading day of the year. Remember the benchmarks started 2014 on a sour note as the S&P 500 lost almost 1%, so BAC’s 3.5% move that session demonstrated excellent relative strength. That being said for the time being until the charts look improve and look worthy of putting real capital to work, these names remain as short term trades. Natural gas stocks looked robust today as energy in general was higher. Best of breed names in the energy group EOG PXD almost gained precisely the same amount today. EOG rose 7 handles on its best volume of the year, and PXD continues to spoon its 200 day SMA.