ChartSmarter Tuesday Game Plan 8/2/16

Markets began the week Monday on a mixed note with the Nasdaq leading the way with a .4% advance. It was the indexes 5th consecutive gain and it was stopped right at the round 5200 figure. The S&P 500 lost .1% and remains in an extremely tight flag pattern which is becoming a little too long in the tooth. I am speaking in a pessimistic fashion and that tone seems to have company with GS mentioning it may be a good time to pare some exposure to stocks (JPM did so recently as well). Is this becoming a consensus opinion and making it more likely that the markets continue their upward move? Opinions matter nothing, and PRICE action will tell soon. One of the only bright spots today was the action in the healthcare group with the XLV far exceeding other sectors in terms of performance, and on the other spectrum was the energy group getting hammered with the XLE taking a 3.2% bruising. BIIB rose more than 4% today as it broke out from a nice cup with handle trigger, which could be interpreted as a bull flag pattern too. Other heavyweight REGN which rose almost 9% last week tacked on an additional 2.1% Monday, but was halted at its 200 day SMA. There was some M&A activity today with FLTX being taken out by VZ, with a nice premium up almost 40%. Companies are certainly seeing value in the stock market as acquisitions have been active and paying up handsomely. Somewhat concerning and something bears are trying to hold onto is the action in the homebuilding arena. Flags have been breaking the wrong way with names like DHI and LEN. Others like PHM have been working (below is the chart from our Friday 7/22 Game Plan), but some of the periphery plays are reacting poorly to earnings. Today it was VMC which was sporting a bull flag of its own, and lost 6%. Peer MLM lost more than 3% after reporting numbers this morning and its tight consolidation just below the round 200 number was taken out to the upside last Tuesday now seems in jeopardy. FIX lost 5% last Friday, but to be balanced there have been some good action with names like AOS, MAS and FBHS.