ChartSmarter Tuesday Game Plan 7/19/16

Markets began the week on a high note with the Nasdaq acting jazzy on the backs off some M&A activity in the semiconductor space. ARMH was bought by Softbank which screamed higher by more than 40%. The made the Nasdaq easily the best performer Monday doubling the S&P 500’s advance up .5%. The XLK has been acting well POST breakout from a 44.46 double bottom trigger taken out on 7/12 gaining .8% in hefty volume. The ETF is now higher 12 of the last 14 sessions. All names are not created equal in the overall group as for every NVDA there is a CAVM. But leaders in the group will continue to lead and some “old tech” players like INTC TXN and AMT are thriving once again. Energy continues to be a perplexing sector and the XLE is battling with the very round 70 figure at the moment. It recorded a bearish counterattack candle there on 6/8 and has not registered a CLOSE above the number this year. It has had a habit of dealing with the round numbers with the very round par figure being stern resistance dating back to the weeks ending 6/20-7/25/15 (3 CLOSED marginally above 100) Then after a 50% haircut, the week ending 1/22/16 found support at the 50 number. One can make the case that a bull flag has formed with XLE and a CLOSE above 70 puts it on a measured move to 74, which does not seem like much but that can move many names in the group handsomely. To be frank it is a little hard to get to excited with the group until leader PXD can climb back above its 50 day SMA, which it has been underneath for better than a month with the brief exception being the 6/23 session. If it can catapult above that important line a good looking double bottom trigger of 169.56 is in place. Below is the chart of PDCE and how it was profiled in our Monday 7/11 Game plan, which was another best of breed names that gives us pause as it is now 18% below recent 52 week highs. Perhaps it remains to be seen if other names can rise up and take their mantle.