ChartSmarter Wednesday Game Plan 1/13/16

Markets for the second straight session put up a decent late afternoon rally, akin to the bulls voting that the short term bottom is in. Of course this seemed to be one of the most telegraphed potential rallies in quite sometime, but the price action is what it is and it should be respected. Bull market action is going out on highs for the day after a soft start. The last 2 days however did start out strong with intraday fades and the benchmarks failed to go out on highs for the day on both Monday and Tuesday. But what really makes sense these days anyway. Tuesday it was the Nasdaq that outperformed advancing just more than 1%. This could be the beginning of a dead cat bounce but lets keep things in perspective as both the Nasdaq and S&P 500 are up 1% for the week thus far, after being down 7.3 and 6% respectively. To look at the glass half full, bulls can say the indexes have more room to run. Energy, materials and utilities were the only major S&P groups to fall Tuesday. Feeding off energy weakness at the pump, many have been perplexed by the inability of retailers to see any benefit. Overall the group is still in the penalty box as the XRT is still down 19% off recent 52 week highs (below is a chart which shows the round 40 number being crucial). But perhaps some green shoots are coming about as 2 names raised guidance, with LULU and BURL each rising 4 and 14%. They are both still in bear market territory lower by 20%. Former best of breed name LE, saw some insider buying by Eddie Lampert reported and it galloped ahead by more than 5%. That name which doubled between the period of going public in April ’14 until the end of that year is now 56% off recent 52 week highs, almost identical performance to SHLD, which spun it off, down 59%.