ChartSmarter Thursday Game Plan 1/21/16

Markets went on a joyride Wednesday and there were some encouraging signs, hard to believe. One the outperformance of the Nasdaq which erased a 3.7% intraday deficit was promising. The tech heavy index also bounced came within 21 handles of testing the 8/24 lows. It was unable to finish positive but the move caught many off guard with the velocity of the gains. Today the Nasdaq recorded a bearish death cross with the 50 day SMA undercutting the 200 day SMA, but the move is more bark than bite. A look at the last time that occurred late last September and saw the benchmark find its short term low and move briskly to the upside to the tune of more than 600 handles. The S&P 500 also bounced off a critical level of 1820 which was last touched in October ’14. Could this be the start of a relief rally? Perhaps some of the most respected minds in the game helped resemble some capitulation today with Gundlach speaking bearishly and Dalio using the D word (Depression). Is this a bottom? Very doubtful, but it could be the start a vicious bear market rally as many are assuming that tomorrow the advances will all be given back. The markets followed their cues once again from the oil patch. WTI lost almost 7% today and some moves in the sector have been breathtaking. Take WLL for example which traded in the low 90’s in August ’14 and today CLOSED near the $5 handle. The biotech and semi groups acted well today with tech being the second best performing sector (healthcare the first and only major S&P group to advance). COLL which we profiled yesterday recorded a nice bullish engulfing candle today and rallied better than 8%. It has filled in a gap from 9/10 and a huge weekly move higher of 78% the week ending 9/18/15.