ChartSmarter Thursday Game Plan 1/5/17

Markets flexed their muscles Wednesday and it was the Russell 2000 that indicated that a risk appetite may be on. The small cap benchmark gained 1.6% and its chart is sporting a nice bull flag formation and a break above 1395 has a measured move of 85 handles. Its chart mimics the XLF somewhat and remember it is the financials that have the largest weighting in the index. The Nasdaq added .9%, another bullish clue as when these two lead it shows investors are feeling more energetic. Notice all three of the big averages are fighting a tussle with the round numbers with the Dow being the most mentioned with that elusive 20000 level. The bears have thwarted either an intraday or CLOSE above and the more times it bumps up on that figure the more likely it may be to penetrate. Wednesdays rally was broad based with energy the only of the major S&P sectors to decline, albeit marginally with the XLE losing .3%. Three diverse sectors stood out, all diverse in nature a good sign, as winners with each jumping more than 1% were the materials via the XLB higher by 1.5%. It is now fighting with the round 50 number and it successfully retested a 49.62 cup base trigger last week (any time one sees chemical names acting well it is often a good sign that economic growth is being forecasted). Consumer discretionary rose 1.3% as the group has looked soft recently and it was real estate up by 1.3% too as the XLRE looks to be building the right side of a cup base with a potential trigger of 34.92. The ETF has produced 4 consecutive weekly CLOSES above the round 30 number and that could be used as a stop going forward.