ChartSmarter Monday Game Plan 7/26/16

Markets never witnessed the light of day Friday to end a volatile week CLOSING on the lows with the Nasdaq and S&P 500 losing .6%. For the week they both tacked on 1.2%, but to be exact the S&P 500’s 2 basis point outperformance rising 1.19% compared with the Nasdaq’s 1.17% gain, it put an end to the 9 week run of the Nasdaq outshining it. Perhaps we will look back and say the Nasdaq top was put in with “old tech” name INTC raising guidance on 9/16 gaining 3% on the second best daily volume of ’16 thus far. The stock did record a cautious spinning top candle that day and followed that up with an engulfing candle on Monday. Bulls may argue that is now sports a bull flag pattern at nearly 2 year highs in a long cup base. Getting back to the benchmarks I have been stating how candlesticks have been very influential in calling near term tops and bottoms. One could make the case that the Nasdaq did complete a bearish evening star formation. Now todays candle was not a large negative candle, but the reversal did feel heavy today (and if you ever find a perfect textbook looking pattern play it with extreme caution). Every major S&P sector lost ground Friday with energy leading the way lower by the XLE falling 1.3%. For the week however every major S&P sector rose with the utilities jumping 3.4%, its third largest weekly move of the year behind two 3.7% gains ending 1/29 and 7/1. From a contrarian point of view I have been viewing the exodus of cash coming of of stock funds at an alarming rate each week, but could it be perhaps smart investors scaling out on the way up? Doubtful as skepticism still runs high and now many are talking about the “scary” month of October in the mix soon. Remember this past week was historically one of the weakest, and it did not turn out that way, so as always just pay attention to price action and filter out the noise. Monitor names that exhibit string relative strength and below is the chart of ETSY which we profiled in our Wednesday Game Plan. For the week it motored higher by more than 12%.