ChartSmarter Monday Game Plan 6/8/15

Markets were slightly bifurcated to conclude the week Friday after a highly anticipated jobs report pre market. The Nasdaq rose .2% and the S&P 500 lost .1%. A look on the intraday chart shows both the Nasdaq and S&P 500 were closely correlated until early afternoon when the Nasdaq showed why it has been the clear leader all year long pulling away relative to the S&P 500. For the week the Nasdaq was UNCH (last 2 weeks the Nasdaq CLOSED less than 2 handles from each other) and the S&P 500 fell .7%. On a YTD comparison the Nasdaq is well ahead higher by 7% while the lagging S&P 500 has advanced 1.7%. Friday seemed to be a risk on trade back on with energy the best performing sector and consumer staples and utilities. Looking closer into energy, both the XLE and XOP are on 5 week losing streaks, there are select names that are tracing out some decent bottoming patterns. I would recommend looking at some of the equipment plays as if the price of crude can retain its recent overall move higher, rig counts will accelerate (the OIH did not succumb to a 5th straight weekly decline and rose this week 1.4%). Below we examine the ETF, XOP, which recorded a bullish engulfing candle Friday. Looking left on the chart one can see the same pattern occurred on 3/18 which lifted the fund 10 handle from low to high. Both candles were backed by strong volume, but the March pattern was a bit more bullish as the preceding candle on 3/17 was a much smaller real body. The XOP offers good risk/reward right here with a close under Fridays intraday lows. Helping the potential outcome was the resistance met at the 50 day SMA by the greenback ETF UUP.