ChartSmarter Tuesday Game Plan 10/4/14

Markets began the week in the red and never saw green throughout the session. I felt that perhaps a slow start and a strong finish would give some nice follow through to Fridays gains but it never materialized. The S&P 500 lost .3% and Nasdaq fell .2% and the S&P 500 continues to be the more worrisome chart, although the uptrend is still intact. Not only is the benchmark now dealing with a right clavicle in a bearish head and shoulders formation, but pesky 50 day SMA resistance. And to top it off that line is beginning to flatline a bit and may potentially start sloping lower soon. The last time it did just that was in late June during the Brexit vote, but there is nothing of that magnitude in front of us. The Nasdaq is now printing some bearish candlesticks recently as it fights to stay above water at the round 5300 figure. Last Wednesday recorded a shooting star and today a harami cross candle, and although they are accurate warnings signs, they are not at all infallible. The benefit of the doubt still has to lie in the bulls hands and I have seen many a bearish candlestick negated recently. At the expense of sounding like a broken record, I could almost cut and paste here that the utilities were the worst laggard Monday. The ETF is now on a current 7 session losing streak and that positive divergence it showed not to long ago has vanished and it is a good example of always giving supreme power to PRICE action alone. It supersedes all else. Select retail names were acting weak Monday and below is the chart of AEO and how it was presented in our Game Plan last Wednesday. It emphasizes the importance of waiting for PRICE to confirm and anyone how attempted to front run the idea BEFORE it reclaimed its rising 50 day SMA felt pain today as it slipped to the tune of 4%. There were pockets of strength today and healthcare was one of those groups. In tonights report all of our ideas emanate from this sector.