ChartSmarter Tuesday Game Plan 1/10/17

Markets began the week Monday in defensive mode. The Nasdaq led and was up earlier on nice tech/biotech strength but gave most of its gains and rose .2%. It was the indexes fifth consecutive up session, with the caveat that trade has weakened with each successive day during the current streak until today. The Dow and Nasdaq never touched positive ground today and the S&P 500 and Dow dropped .35% and .38% respectively. The S&P 500 has recorded a series of bearish candlesticks recently with engulfing days on 12/21 and 12/28. In addition last Thursday registered a bearish harami and Friday a spinning top at all time highs, which often suggests a pullback is in the works. Notice the spinning top candle on the Russell 2000 from 12/9 which it has been unable to get above for evidence of the relevance of the candle. Monday it fell .7%, an outsized loss compared to peers. The clear winning group today was healthcare as the XLV enjoyed a .4% advance, recording only its fourth 5 session winning streak in over a year. Below is the chart of INCY and how it appeared in our Wednesday 11/31 Game Plan and shows why it is important not to take a leader off a watchlist, and the virtue of patience. The sector was a beneficiary of some M&A activity within and the JPM Conference. Three names were acquired Monday with WOOF, ARIA and SCAI all receiving interest and the premiums were sweet. Energy names were soft as the XLE fell 1.5% and it was the weakest performer today. The ETF seems to be breaking downward from a bullish 3 week tight pattern, with the three weeks ending between 12/9-23 all CLOSING within just .25 of each other.