ChartSmarter Tuesday Game Plan 1/19/16

Markets ended the week, bruised as they have endured the worst start to a year ever. Friday the S&P 500 did test last August lows and for the moment held. A lukewarm rally that began just after lunch saw the indexes CLOSE somewhat off session lows. For the week the Nasdaq slipped another 3.3% this week and is now 14% off recent all time highs. The S&P 500 lost 2.1% and it is now lower by 12% off its own highs. On a YTD basis the Nasdaq has declined 10.4% to the S&P 500’s 8% and we continue to worry about the Nasdaq underperformance. Many will look to oil to determine when markets will begin to stabilize. I will keep an eye on the Nasdaq relative to the S&P 500. As the Nasdaq waivers one should continue to search for shorts in the tech subsectors particularly semiconductors and biotech. One would have thought that the S&P 500 which holds much more energy exposure than the Nasdaq would be “lagging”, but of course the energy weighting has less of an influence as the sector disintegrates. Not surprisingly tech and energy were the only major S&P sectors to fall more than 3% Friday. Keeping a close eye on the energy group one is beginning to see what names are more likely not to survive the onslaught which has been thrust upon the sector. Many are trading in the low single digits and these names should be avoided. Some include WLL, OAS, CHK, CIE and CJES. Below is a name from Fridays Game Plan where the round number theory came into play. Three days this past week it traded intraday underneath 20 but recorded no CLOSES below. That is your line in the sand.