ChartSmarter Friday Game Plan 1/27/17

Markets digested gains Thursday as the Nasdaq and S&P 500 were basically flat, and it was the small cap Russell 2000 that underperformed down .5%. The S&P 500 looks to be emerging from the 3 week tight pattern we spoke about recently (last 3 weeks all CLOSED within just 5 handles) and thus far for the week is higher by 1.1% It is the Nasdaq acting even better higher by 1.8% heading into Friday. Investor skittishness still is elevated with markets at all time highs, which is bullish by the way, as sentiment according to the AAII is now in the low 30s. This could thrust those bearish back in to chase markets. Remember the old adage that bull markets die on euphoria, and it seems that is still nowhere in sight. More impressive on the Nasdaq weekly chart is that the prior 6 up weeks all CLOSED right at highs for the weekly range, and if tomorrow finishes near here it will make seven. Like they say it is not where you start but where you end up, and this applies in a meaningful way with benchmarks. Thursday groups growth players like to see in the laggard section were healthcare, staples and utilities leading the way lower. Advancing sectors were your normal ones with industrials, cyclicals, materials and financials. Concerning continues to be energy names which seem to drift lower to CLOSE near lows for the session after lukewarm to decent intraday gains. Is the action foreshadowing some weakness ahead? I feel that it is just consolidating recent gains and the group has to be given the benefit of the doubt until no longer warranted. Below is the chart of PTEN from our Tuesday 1/24 Game Plan, which illustrates again why good risk/reward entries are the initial time a stock touches a rising 50 day SMA after a recent breakout. On the weekly chart it has the look of a very long cup with handle pattern that began the week ending 7/25/14. Potential add on trigger is 29.66.