ChartSmarter Tuesday Game Plan 2/2/16

Markets displayed some character Monday to begin the week. The huge double top I thought that occurred on the Nasdaq with the March ’00 highs, could still be in play, but the longer it trades in this vicinity one has to be openminded to more gains. Of course chatter from the bulls is becoming louder by the day which is concerning, but todays price action was decent with indexes finishing right near the UNCH line well off the lows. Benchmarks were down 1% early on and they moved higher throughout the session even as oil slumped 6% (of course hedge funds reduced short bets last week on crude) and China fell by close to 2%. It was a positive to see them shrug off those headlines. Looking at some longer dated data concerning history, this year with the Iowa caucuses starting today. We are in the last year of a presidency at looking at it from a historical perspective the last 2 times that occurred we encountered negative years. In 2000 during Bill Clinton’s last year in office the S&P 500 fell 10.1%, and in 2008 as George Bush left office the benchmark dropped 38.5%. Now both of those years came after Y2K and then the housing crisis, so will this year bring something new? It does feel like we may be entering another bad news is good news scenario as whispers are being heard of more QE at some point down the road. There was some confident behavior today other than the tape, with some merger activity with ABT buying ALR at a hefty 45% premium. Perhaps investors are starting to see some bargains in the battered sector. One name we profiled in our 1/20 Game Plan is the chart below had a nice ride Monday up better than 10%. The company is trying to help with “products that address the growing problems associated with non-medical use, abuse and misuse of prescription products”. Lets hope they are successful regardless of the stock price.