ChartSmarter Wednesday Game Plan 2/3/16

Markets were underwater for the entire session but the losses accelerated as the day wore on, classic bear market behavior. The Nasdaq was hit the hardest with a loss of 2.3% and the S&P 500 lost 1.9%. Financial were among the hardest hit Tuesday along with energy and materials. Oil sneezed more than 5% and the market caught a crude cold. The oil and stock market correlation returned after a brief, couple session hiatus. If I had a dime for every time I heard the “decoupling” word recently I do not know what I would do. Energy was the worst performing sector with 2 heavyweights reported earnings before the bell in XOM and BP (APC bucked the trend). XOM which had a decent looking bullish inverted head and shoulders pattern with resistance at the head and right shoulder at the round 80 number fell more than 2% and its dividend yield is nearing 4%. BP dropped more than 8% which mirrors its dicey dividend yield of 8.3%. Transports were hit today as well as we know the rails story well, but some parts makers are showing some strength. TRN which we profiled (chart below, to be fair the trigger was never hit) in our Friday 1/22 Game Plan fell today for just the 3rd time in the last 10 sessions after a bullish counterattack candle on 1/20. Corrections can come in different varieties. Some come in your “10%” price fashion (obviously were are just beyond that criteria currently), others come in time. The rough average of corrections last in the neighborhood of 8 months. If one looks back to the highs made during the week ending 7/24/15 on the S&P 500 we are now into our 6th month. Many are calling for the 1740 handle to be tested, highs that were made back in February of 2014. It looks like that would be a plausible amount of time to trade down to that figure.