ChartSmarter Friday Game Plan 4/7/17

Markets once again showed some weakness shying away from intraday highs, but one has to be impressed with the averages holding up with a seemingly myriad reasons of why they should drop. You could point to the healthcare bill failure, tax reform looking as if it will be pushed back further than many believed. Some hawkish comments regarding both Syria and North Korea yet the benchmarks are not giving much back. That could change with Friday mornings employment report of course, but for the time being one has to respect the tape. Risk on groups were among the leaders today with energy, financials, materials and industrials showing the way. Lagging were the staples, technology and utilities. The volume that was associated with Wednesdays downdraft was firm and perhaps was a tell and peering into the Russell 2000 chart shows a potential bearish head and shoulders, although it did outperform today up .9%. It is still premature but a move below 1340 could carry a measured lower by 890 handles and the longer that index remains underneath the 50 day SMA the greater the chances of it occurring. Heading into Friday the Nasdaq has slipped by .6% and the S&P 500 by .2% and if that remains through tomorrow would keep a streak of one up and one down for the last 6 weeks. One has to remind themselves however that with all this uncertainty and plausible potential weakness the Nasdaq is just 1% off recent all time highs and the S&P 500 by 2%. One genuine concern that I do have is the action of some recent breakouts that have been acting a bit soft so quickly after a valid move. Take the example of ESNT, a favorite insurance/financial play, which stormed above a double bottom trigger of 36.91 and recorded a bearish gravestone doji candle Wednesday finishing below the pivot, emphasizing the importance of CLOSING prices (today did record a bullish hammer). Sure the markets intraday reversal contributed but we know the best breakouts tend to work out right away.