ChartSmarter Tuesday Game Plan 1/24/17

Markets fell across the board after a very brief interlude in positive ground to start the day. They did CLOSE well off session lows and it was the Nasdaq which “acted” the best lower by .04% recording a second consecutive spinning top candle, and third in the last four days. The last 6 days now have not violated the bullish hammer candle lows from 1/12, which bounced almost precisely off the round 5500 number. In the media we continue to hear how markets are long overdue for a sell off and the longer those calls persist without any follow through to the downside it might actually add to fuel to the fire of the upside. The Russell 2000 for the third straight day is now hugging its 50 day SMA for the first time in two months. That benchmark has wildly outperformed and if this test is successful it could help give the overall averages a well needed push toward all time highs in the near term, which no one seems to be predicting. This has been happening to many individual names as well and often the first time a stock touches that important line after a breakout offers an ideal risk/reward scenario and entry. Looking back on history in regards to how markets tend to act post inauguration favors the bulls. Here is a link I saw from the Urban Camel @ukarlewitz that shows the behavior of the indexes, which shows very clearly that generally the first 10 and 75 days following tend to be on the positive side. Of course the markets have had a considerable run, but the sideways trade in my opinion, please take it with a grain of salt over pure price action, favors the bulls. There were not many big moves to the upside Monday regarding individual sector performance, but energy was a clear laggard with the XLE dropping 1.1%. Perhaps there has been too much optimism in this group. Below is the chart of NBR and how it appeared in our Thursday 1/19 Game Plan as a short candidate. An ideal entry to cover would be at its rising 50 day SMA and reverse and go long.