ChartSmarter Wednesday Game Plan 6/8/16

Markets finished close to the UNCH line Tuesday and off session highs. The Nasdaq did fall by just .1% but it was the laggard throughout the day. The tech heavy index seems to be stalling at the round 5000 number, or is it just biding some time catching its breath after a 300 handle rally since the intraday lows on 5/19? The Dow reversed almost precisely at the round 18000 number and it is sporting a decent looking cup base pattern with a trigger just above 1867. The S&P 500 did remain above its crucial 2100 figure but on its daily chart did record a bearish shooting star. I have found recently that the candlestick patterns are working much better at forecasting bottoming patterns and not signaling the topping formations that well, so we will see how much credence that shooting star carries going forward the rest of the week. Perhaps the oil/equity correlation will stick around longer than most investors think, as the markets seemed to take their cue when the crude markets CLOSED above 50 in the late afternoon hours. Talking about oil and the stock market relationship, today we saw some outperformance in the transport group which normally act in an inverse fashion. The airline group and the XLE rallied better than 2% today leaving traders perplexed. The rails have continued to signal a potential heat up in the economy 6 months out as some names seem to be suggesting. Below is the chart of CP, which is now higher by almost 6 handles since we highlighted it in our Friday 6/3 Game Plan. The IYT is quietly consolidating its 9 week winning streak between the weeks ending 1/22-3/18 which ran more than 30 handles during the timeframe. Will they be delivering a nice message to that markets soon, pun intended.