ChartSmarter Thursday Game Plan 8/11/16

The Nasdaq and S&P 500 spent basically the whole session underwater and it was the Nasdaq that fell .4% compared to the S&P 500 which dropped .3%. One would have to go back 31 sessions to witness a back to back losing streak just to show how powerful the rally has been. Is it getting heavy? Perhaps more concerning was the Russell 2000 which surrendered .7% as it is a proxy on the US as it is comprised by smaller, domestic names. Looking at the 10 year Treasury yield which is still mired in a downtrend and having issues each time it tests a downward sloping 50 day SMA. Yields will often go up in harmony with stocks prices as they trade in the opposite direction to bond prices, so it could be trying to tell us something. The energy/stock correlation is seemingly returning as the XLE slumped more than 1% and for the second straight day was the worst performer. Leading the way for a second consecutive session were the staples, a group growth bulls frown upon. The ETF has been trading listlessly since a bearish gravestone doji candle on 7/14. It has been garnering support at its 50 day SMA since late last month, but one could make the case for a bear flag pattern taking hold. The utilities were higher today with the XLU eking out 2 penny advance and if I had to choose between the 2 ETF’s this would have to be my choice. Below is my explanation why.