ChartSmarter Wednesday Game Plan 1/14/15

Markets encountered a roller coaster ride Tuesday as early, robust gains were negated by the close. Volatility is back in a big way and these types of big, erratic moves are indicative of market tops. Both the Nasdaq and S&P 500 turned morning gains of better than 1%, Nasdaq closer to 2%, into light afternoon losses ending down by .1% and .3%. The bears would love to see another early morning advance Wednesday and a late selloff into the close, hallmark bearish traits. No one can ever predict with certainty where markets are going but there were some warning signs in the way of breakout behavior. Remember that the best breakouts work right away so when names quickly falter those are red flags. ILMN is a good example taking out a 196.10 double bottom trigger last Thursday (below is the chart from our 1/8/14 Game Plan). Monday the stock sank below the pivot point although it did receive ample 50 day SMA support. Notice how the round numbers came into play with the big 200 figure last Thursday and Friday proving to difficult to get through. Monday it bounced almost precisely off the 180 handle. LEN attempted a move above a cup base trigger of 48.10 this morning before reversing very hard. Many in the sector recorded very ugly reversals Tuesday as well, like TMHC which blasted above its 200 day SMA only to mount a furious reversal to the downside.