ChartSmarter Monday Game Plan 2/13/17

Markets recorded another solid session to back up Thursdays fine move, and it mirrored yesterdays action as well. Decent early gains were added upon and then remained strong, refusing to buckle and giving the bears perhaps some uncomfortable sleep this weekend. The Nasdaq now has gained ground for 6 consecutive Fridays, and as always it is not where you start but where you finish. The Nasdaq and S&P 500 rose .4% and the Russell 2000 was a standout once again rising .75%. On a weekly basis the Nasdaq gained 1.2% and the S&P 500 tacked on .8% (it was also the sixth straight week both benchmarks CLOSED at or well into the upper half of their weekly ranges). The materials, industrials and energy groups were the winners Friday with each group advancing between .8-.9%. This type of action if it continues signals some nice economic expansion later this year. On a weekly basis it was the industrials, cyclicals and technology that outperformed. A group that I am keeping a close eye on is the transports. They were one of the early leaders in the move higher and perhaps their recent rest has given them the stamina to duplicate that action again. Below is the chart of the IYT and a scenario we think may play out. It attempted to break above a cup base trigger of 171.26 on 1/26 and came within pennies of doing so only to be derailed, pun intended (two of the largest components are rails with NSC and UNP representing almost 15% of the fund). The ETF has now regrouped and reclaimed its rising 50 day SMA promptly last week, a very bullish trait. These names will benefit from the transfer of commodities which seem to be firming up recently. There was benign news out of China last night, and many individual names in the copper and steel sectors looked primed. Crude bounced as WTI has enjoyed a 3 session winning streak, its first since the beginning of January, and it too is right up against an ascending triangle pivot of 54. Next week could be exciting for sure.