ChartSmarter Friday Game Plan 5/20/16

Markets finished lower Thursday but well off session lows at lunchtime. The Nasdaq was off 1.25% and managed to claw back to end up declining .6%, and in the process perhaps registered a bear trap as intraday it broke below a flag pattern. Today the tech heavy benchmark recorded a doji candle which often indicates confusion and a potential trend change. Additionally it was a bullish harami and when a small real body (doji) is recorded it often strengthens the signal. The index also found support near the bullish piercing line candle on 5/6. Heading into Friday it is still looking at a potential 5th consecutive weekly loss (last occurred during a 6 week losing streak between weeks ending 10/12-11/16/12). The last 2 and this one have all CLOSED thus far very taut all within just 23 handles. That tight type of trade normally is followed by a strong move. Will it be up or down? At the expense of sounding like a broken record, if technology as a whole can get moving, new highs for many benchmarks is in store. We did see some nice earnings reactions from some “old tech” names like CSCO and CRM gaining 3.2 and 4.1% respectively. Thursday however, the clear winning sectors hailed from the defensive in nature utilities and staples each rising 1%. Surprises from the struggling retail group were a nice development with the stocks of AEO and URBN higher by 18.4 and 13.9%. The 800lb gorilla in the space, WMT advanced almost 10% in the best daily volume of the year thus far. In the laggards will be laggards conversation LB was the star Thursday as it reported earnings that were as skimpy as some of their product line. It fell 5%, but did find temporary support at the round 60 number.