ChartSmarter Friday Game Plan 1/20/17

Markets were a bit shaky Thursday, but managed to finish slightly off sessions lows although they did both record bearish engulfing candles. The Nasdaq fell .3% and the S&P 500 slipped .4%. For the week heading into Friday both are lower with the Nasdaq off .6% and the S&P 500 by .5%, and the latter can complete a bullish 3 week tight pattern depending on tomorrow’s finish (the prior 2 CLOSED within just 2 handles). That formation, a bullish continuation pattern developed by William O’Neill however did not help the index as it CLOSED the 3 weeks ending between 12/6-23 by just 6 handles. Obviously tomorrow we have the swearing in, and I remember not long ago a well headlined report, “buy the election and sell the inauguration”. There seems to be an abundance of prognosticators announcing the market is ready for a correction. We hear “fade the Trump rally” or even if all the policies are implemented, prices TODAY are reflecting that. We know the market always attempts to confound the most so lets stay tuned to the only thing that matters and that is PRICE action. One comment I did read yesterday was how Einhorn feels that the last administration was good for Wall Street, and bad for Main Street, and how the incoming one could be just the opposite. The drop today felt a bit worse as there was just one major S&P sector to advance Thursday and that was the industrials with the XLI higher by .7%. Talking about price action and demonstrating a good example of why not to act ahead of a potential trigger below is the chart of MJN and how it was profiled in our Friday 1/13 Game Plan. The round 60 number was never penetrated to the downside and those who preferred to be “early” felt the pain.