ChartSmarter Thursday Game Plan 12/8/16

Markets are now on a current 4 session winning streak and they did so resoundingly. The Nasdaq and S&P 500 rallied by 1.1% and 1.3% respectively and the S&P 500 decisively took out the bull flag we mentioned last week and now has a measured move to just above 2300. The Dow is well on its way to hitting its targeted move off the very round, hat making 20000 number. It rose 1.5% and on a YTD basis is ahead of the aforementioned two, higher by 12.1% compared to the S&P 500’s advance of 9.6 and the Nasdaq’s 7.7% gain. It has really demonstrated excellent momentum recently and is looking for its first 5 week winning streak since the weeks ending 2/19-3/18. Keep in mind while the Nasdaq and S&P 500 lost ground last week by 2.6 and 1% respectively, the Dow managed to eke out a fractional gain of .1%. The rally Wednesday was broad based with 9 of the 11 major S&P sectors rising by 1% or more (energy rose .8%), and healthcare was the clear loser with the XLV slipping .9%. Consumer discretionary was one of the biggest beneficiaries today as the XLY gained close to 2%. Speaking off flags, below is best of breed retail play PLCE and exactly how it was presented in our Monday Game Plan this week. I am hearing a lot of fade the retail rally chatter and that perhaps in a contrarian fashion is feeding fuel to this fire. Healthcare woes should not have come as a surprise, since it is the worst performing S&P sector this year with the XLV declining nearly 5% (the only other major S&P sector to be lower YTD is the XLRE which was recently created as the financials via the XLF are now more of a pure play). Some solace can be given with the action in the IBB today as it printed a spinning top candle, which will often signal exhaustion of the prior trend. It did so filling in a gap from the 11/8 session as well.