Markets were somewhat bifurcated until late in the day when the downturn became a bit more pronounced. The Nasdaq was hanging in decently but for the second straight session reversed at the round 7300 number and fell 1% off intraday highs both today and last Friday. Today it CLOSED right near the UNCH line and keep in mind this is the benchmark investors want to watch very closely as it has been bullishly leading the way. Hardest hit off the big three was the Dow off more than 250 handles as one of its components fell sharply today, although it was not one of the highest price names in the index. It was WMT that sank more than 10% Tuesday and its chart which had been trading very tight, hallmark bullish characteristics, have suddenly become wide and loose. The stock did complete a nearly perfect measured move of 10 handle in a bull flag breakout that began at round 90 number, took out par and then traveled to 110 on 1/29. Give the name some time to heal. The S&P 500 lost .6% and fell underneath its 50 day SMA after last Fridays bearish shooting star, although they tend to work best at all time highs. The Russell 2000 which was the only of the aforementioned four averages not able to reclaim their 50 day SMAs last week was rejected there today and slipped nearly .9%.

Looking at individual groups the top performing groups were just what bulls wanted to see with technology and financials acting best, with one up and one down on the day with the XLK up by .1% and the XLF off by .2%. Lagging were the defensive sectors, as the utilities which seem to either be at the top or bottom of the major S&P sectors each day recently. The XLU dropped 1.2%, and was only outdone to the downside by the staples with the XLP getting thrashed to the tune of 2.2%, even with the Albertson’s acquiring RAD. Of course the latter has been a perennial bottom dweller still 64% off most recent 52 week highs even after Tuesdays news. The stock which traded with a low 2 handle was as high as the very round 50 number in December 1998. Even GIS raising guidance could not get the stock to finish in positive territory today. On the other hand M&A activity was able to affect the semiconductors in a positive way as NXPI was back in the news today as QCOM upped its bid. Other names in the space that shrugged off a weak overall tape were CRUS, KLIC and UCTT which rose by 4.9, 4.9 and 6.1% respectively. Only problem is all of them are steeply off most recent 52 week highs.

The chatter regarding Brazil is becoming louder with each passing day, and perhaps with good reason. The political climate is getting somewhat better and of course they are a major commodity player feeding a global economy that continues to expand. The EWZ has advanced 13% YTD and sports a dividend yield of 1.5%. The ETF broke above a 44.13 cup base trigger on 1/19 and showed a good response after an initial touch of its rising 50 day SMA on 2/8 and the next session recorded a bullish hammer candle. A chart that acted very firm Tuesday was paper play FBR and below is how we profiled the name in our Wednesday 1/3 Game Plan. It had been flirting with its 50 day SMA last December and the line was tilting downward, but that has all changed now. The stock cleared its 50 day on 1/9 and then punched above a double bottom trigger of 16.72 on 1/22. It has acted excellent POST breakout and is now sniffing out the very round 20 number, a figure it has not been in contact with since 2010. Looking further back on its weekly chart it displayed solid action after a break above a 14.04 cup base trigger the week ending 10/6/17 in a pattern that began the week ending 11/27/15, and that breakout was retested and held firm last December. This name is battle tested.