ChartSmarter Thursday Game Plan 7/21/16

Markets acted firm on Wednesday with 2 groups really taking control, that being technology and healthcare. They have both been the beneficiary of nice rotation into and it looks like they are ready to do a good chunk of the heavy lifting going forward. Like a substitution in a soccer match, markets thrive on fresh legs assuming a leadership position. Conversely it has become common place that specific sectors have been seeing money flow away from them and they were represented by the three lagging groups today, being the energy, staples and utilities. “Risk on” is coming back in vogue as the Nasdaq powered ahead to a 1.1% advance Wednesday with a big reason being MSFT after earnings. Interestingly enough the stock CLOSED Tuesday almost precisely at a 53.10 double bottom trigger originally taken out on 7/12. Smart investors took some money off the table in the upper 56’s as that was stern resistance last December and this April too (notice on MSFT weekly chart the presence of some big distribution weeks ending 1/8, 2/5, 4/22 and 6/17 which declined by 5.7, 8.9, 6.9 and 2.6% respectively). Sure it would have been out of character to hold into earnings, but the environment has become a little better to hold leaders that report. Another good example would have been CTAS. It blasted higher by 9.7% Wednesday and below is the chart we highlighted in our Tuesday 5/24 Game Plan (notice the stock acted well POST breakout, a bullish sign). TUP rocketed higher by 7.7% breaking through a double bottom trigger of 60 exactly. ITW rose nearly 3% after a well received earnings reaction. A nice diverse bunch of names excelling Wednesday is a good sign.