ChartSmarter Tuesday Game Plan 6/16/15

Markets recovered most of their morning losses Monday and it was the Nasdaq which “performed” the best after dropping 1.3% early on, the most of the big three indexes. It fell .4%, while the S&P 500 fell .5%. The Dow which we rarely followed recorded its second straight triple digit loss. The Nasdaq has produced 3 hammer candles recently on 5/12, 6/9 and Monday (6/9 was more of a doji, but still a nice reversal) to CLOSE back above its 50 day SMA after slipping below it intraday. That can be looked at either positively or negatively and although the price action is favorable, we think this shows bulls losing their grip and the market fatiguing. Of course pay attention to price action only going forward as always. The S&P 500 on the other hand has been below its 50 day SMA more days than it has been above in June thus far. All ten of the major S&P 500 sectors lost ground Monday, but none by more than 1%. Yesterday brought back the Merger Monday moniker with a couple of deals in strengthening sectors. In the software group Cox Automotive saw significant value in TRAK paying an almost 60% premium to Fridays closing price. Among the homebuilding group RYL and SPF are merging and each rose more than 5% on the announcement. Both surged above their 50 day SMAs and are forming good looking cup shaped bases.