ChartSmarter Tuesday Game Plan 10/18/16

Markets retreated slightly Monday as the indexes enjoyed a very brief time in positive territory in the early morning. The Nasdaq and the S&P 500 fell by .3%. One has to paint a somewhat weak picture as the leading Nasdaq and Russell 2000 have demonstrated a reluctance to recoup their 50 day SMAs. The longer that takes the more one has to look at the action as suspicious. The Russell 2000 is now on a 6 session losing streak and is potentially on track to record a 4th consecutive weekly losing streak depending on Fridays close and that is a feat that has not been witnessed since September-October ’14. In this type of environment we are experiencing one would expect a better performance out of gold. The GLD has recorded 5 dojis in the last 8 sessions, which often give a heads up about a likely change in trend. The ETF is now consolidating below its 200 day SMA and one may say all those dojis should have recorded a turnaround already, and they would be correct. Usually it take one or maybe two dojis for a warnings, but this many and its inability to recapture its 200 day SMA is worrisome. A trend more concerning is the utilities and how they have been the top performing sector almost on a daily basis and today they did just that once again with the XLU advancing .5%. It is hard to get too excited about the chart, but I bring this up because the talk recently has been how rate hikes are almost a certainty and how that used to punish the group. It is even way to early to call this a “sell the news” event because of course the Fed has done nothing as of yet. But the financials which have been turning in some decent earnings reports have gone nowhere, even with the rate hike chatter. Monday the XLF undercut its 50 day SMA after last Mondays gravestone doji near the round 20 number which has been difficult to overcome in the past. Consumer discertionary was the worst behaving group and we highlighted a number of shorts in Mondays Game Plan and below is how we looked at laggard GIII.