ChartSmarter Wednesday Game Plan 10/12/16

Markets fell broadly Tuesday and finished moderately off afternoon session lows. The Nasdaq was hit to the tune of 1.5% compared to the S&P 500 falling 1.2%. The S&P 500 felt the weight of it hanging below its 50 day SMA which is now sloping lower for more than one month now. Perhaps most concerning was the behavior of the Russell 2000 which dropped 1.8% and sliced its 50 day SMA in the process. Prior to todays session it was higher by roughly 10% and the Nasdaq and S&P 500 by 6%, so perhaps there will be some competition heading into year end on who will come out on top as before it looked like a foregone conclusion. We are on the verge of some positive seasonality with November not far off and that would signal the start of the best 6 months historically for the benchmarks. The indexes tend to bottom in the beginning to the mid of October so perhaps that could help bulls in the near term. From a sentiment perspective AAII bulls were beneath the 30 number for 7 straight weeks and there have been negative outflows from equities 33 of the last 40 weeks. All eleven S&P sectors lost ground today with the “best performer” the staples, with the XLP losing .5% and the newly created XLRE dropping .8% as investors fled to safety which has been a rarity as of late. Getting hit the hardest was the healthcare sector with the XLV surrendering 2.5%. If one has an affinity for the group as always insist on owning purely best of breed names. Below is the chart of ABMD and how it appeared in our Friday 9/16/16 Game Plan. Monday it broke above a bull flag pattern, but that quickly fizzled out and look for a pullback toward that 124.82 cup base pivot point to enter.