ChartSmarter Thursday Game Plan 1/7/15

Markets were rattled once again on Wednesday, with the major averages never seeing the “green” light of day. At its worst indexes were down close to 2%, and the Nasdaq is now on a 5 session losing streak. Looking back it fell for 5 straight days during the same exact time period last year. From 12/30/14-1/6/15 it fell 4.5% and the good news is lows made then turned about to be the lows until the late August debacle. During the same time frame this time around it fell closer to 6%. This week is still young and the Nasdaq is lower by 3.4% “underperforming” the S&P 500 which has gave up 2.6%. This relative weakness is a concern that we have raised many times. It is potentially looking at another weekly drop of 4% or greater for the third time as the weeks ending 11/13 and 12/11 surrendered 4.3 and 4.1% respectively. One can blame the price action on a multitude of circumstances, North Korea, Fed declaring recent rate hike was fiercely debated, continuing Middle East tensions, etc. Truth is price action is going to do what it wants and you have to trade the market that is, not the one that you want. Price is how we are paid and to disregard its message could be costly. All ten of the major S&P 500 sectors lost ground, with energy and materials bleeding more than 3%. Utilities were for the second consecutive session the strongest falling .5%. Transports a good indicator of the genuine health of the economy eased by 2% and today the IYT tested the August lows just above 128. Will it be a successful retest? In my opinion doubtful. Already I have been wrong with a name well represented in the ETF, NSC which I examined in Wednesdays Game Plan. The chart is below and the stop is perilously close to be taken out.