ChartSmarter Thursday Game Plan 5/19/16

Markets were a bit bifurcated Wednesday with the Dow and S&P 500 essentially flat and the Nasdaq rising .5%. The Nasdaq has slowly started to show signs of potentially taking a leadership role, which would be a very welcome sign for the bulls. The tech heavy index is about to record a bullish golden cross, which is not as strong a move as many think, but also a bullish crossover on the MACD. To be balanced it has held the round 4700 number since 5/6, but one could make the case it resembles a bear flag pattern. A break below could have a measured move 270 handles lower. The financials were easily the best performing sector today with the XLF jumping 1.75%. The ETF is on a 3 week losing streak falling 3% in the timeframe, but overall is acting better since a bullish morning star pattern completed on 2/12 at the round 20 number. It has held its 200 day SMA very well ever since taking it out on 4/19, and new anticipation of higher rates into year end has the group energized. Conversely the view that rates will accelerate going forward put a bid behind the greenback which softened the energy names (interest rate sensitive utilities slumped 1.9%). The XLE lost 1% and many bears I hear point to the continuous bankruptcies, but in my opinion that is a glass half empty look at best. The optimist says we are separating the weak from the strong and that is healthy behavior. We have heard some bullish outlooks on the group with GS and PJC making the case for higher prices, and to the contrarian that may be concerning, but the price action is irrefutable. A lot will depend on the direction of the dollar and the UUP has risen 10 of the last 12 sessions and is looking for a third consecutive weekly gain up .7% headed into Thursday. Stick to best of breed names like XEC which is now just above retesting a 115.79 cup with handle trigger originally taken out on 5/16 (below is how we profiled the name in our Friday 5/6 Game Plan).