ChartSmarter Friday Game Plan 5/27/16

Markets for the most part were flat Thursday, and after the last 2 sessions hefty gains it has to be viewed as bullish. More to like was the Nasdaq’s outperformance, albeit small, which rose .15% compared to the S&P’s flat finish. For the week headed into Friday it has jumped a robust 2.8% and is inching closing to a breakout about the bullish inverse head and shoulders pattern we spoke of earlier in the week. The S&P 500 is higher by 1.8%. Thursday marked the return of the defensive utility and staples groups, which we the best performers with the XLU gaining 1.1%. The ETF has put up back to back big volume breaches of the 50 day SMA on 4/20-21 and 5/17-18 which fell a combined 4.6 and 3.6%. Today it recouped that line but volume was limp. I have been seeing an abundance of nice bases setting up in individual stocks (such as your traditional cup with handle, double bottom, etc.) and it has been a little while since that has happened and that type of behavior is a bullish sign. Breakouts are occurring and more importantly they are holding firm. A great example is the stock of CXW which we profiled in our Monday 5/9 Game Plan. It took out a double bottom pivot point of 32.21 on 5/5 and for good measure retested that trigger on both 5/18-19 and held firm. Stocks often will go back to the breakout trigger to test its authenticity. The stock the last 2 weeks and this one thus far, has traded within the big week ending 5/6’s 9.7% advance. A move above the 34 handle could be used to add to ones stake or initiate a new position.