ChartSmarter Wednesday Game Plan 12/7/16

Markets made it three consecutive higher sessions, although gains were muted with the Nasdaq gaining .45% and the S&P 500 by .35%. Perhaps after the indexes recent runs that type of behavior is just what the doctor ordered. The Russell 2000 had another banner day gaining 1.1%. Financials led the way Tuesday and they may still be undervalued and we may just be starting to begin to witness just how cursed this group was, and that may be why their recent ascension has just begun. The XLF has risen 15% since its good looking cup base breakout above the round 20 number nearly one month ago. Keep in mind that financials have the greatest weighting in the Russell 2000 so their will be some correlation as they move northward. Lagging sectors included the utilities, staples and materials. The consumer seems to be awakening, or at least that is the message the charts are sending, with many names in the group forming bull flags. Meaning they are taking prudent, healthy pauses before potentially resuming their uptrends. Below is the chart of AAN and precisely how it appeared in this Tuesday’s Game Plan. It formed in conjunction with the round 30 number and this fledging breakout has mojo toward the 38 number over the near term. The pattern looks very similar to the flag the XLY has carved out recently. The ETF is trading just above highs made just below 82 almost exactly one year ago. If the charts are correct, as they usually are, they are anticipating a more vibrant consumer. A more energetic consumer will help a myriad of industries and today we observed just that with the reaction in the homebuilders. TOL reported earnings this morning and rose nearly 5% Tuesday and is higher by nearly 9% for the week thus far. The stock jumped almost 4% Monday the day BEFORE earnings were to be delivered on the fourth best daily volume in all of 2016. Things that make you go hmmmmm.