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The bull flag formation is a continuation pattern, that forms during an uptrend. Keep in mind leading stocks, will offer investors a chance to add to them on the way UP. The pattern forms after a sustained move higher, and then the stock digests the strong advance, with very taut sideways action. Generally one does not want to see the flag last more than 3 weeks. It is considered very bullish as the stock is stubborn to not give anything back following a powerful rise. The breakout occurs when the stock breaks above the top of the flag, preferably in firm volume. The measured move would be the length of the flag "pole", added to the breakout PRICE. What better way is there to learn than to look at a few recent examples.

The bullish ascending triangle is just as it sounds as a triangle takes shape with a horizontal line on top that acts as resistance, and the bottom line is sloping upward, making higher lows along the way. This could form in either uptrends, or as a bottoming pattern. The entry would be a decisive breakout above the top horizontal line which will normally come into contact at least 2 to 3 times. There is a debate in technical analysis, about whether the more times a line of support or resistance is touched, does that support or resistance become stronger or weaker? I say the latter. In this pattern we get an implied move by taking the depth of the formation and its greatest distance and add it to the breakout. Lets take a look at a few recent examples.

Value/Growth Struggle: As many market participants begin to think the overall markets are getting frothy, and value seems to be perennially lagging growth, at some point the relationship will shift. Of course as technicians we are "seeing is believing" types, as we need PRICE action to confirm. Below we see the ratio chart of the XLV to the XBI, most likely the best gauge of determining value versus growth within healthcare. It obviously is strongly favoring the XBI at the moment, and capital should continue to flow in an overweighted fashion until the technical circumstances change. On both the YTD and one year time periods the XBI is outshining higher by 8% YTD and 24% over the last one year period, compared to the XLV which has declined 2% in 2019, and is higher by 13% over the last 52 weeks.  

As the debate carries on about whether we have hit a market bottom or not, some reliable chart patterns, can help identify if individual names could be safe to venture into. Today I would like to discuss the bullish inverse head and shoulders, and what better way to describe the formation with a few recent examples. This pattern tends to form after a downtrend, with most sellers being washed out. It takes some time trading in a somewhat sideways fashion, with three different criteria, consisting of two shoulders separated by the head, whose low must trade beneath both shoulders. The highs of each of these three "body parts" should be roughly similar and would produce what we call a "neckline", or your ENTRY point. Upon the breakout from this pattern we can look for a "measured move", which we obtain by looking at the depth of the head to the neckline and adding that to the breakout trigger. Let us take a look at three recent examples.

Software Firming: The newly crowned technology group, that reclaimed the best major S&P sector performer on a YTD basis over healthcare recently is looking to flex its muscles. The XLK is still lower by just over 1% in 2019 thus far, but the seemingly constant tug of war between the two most closely watched sub groups in tech rages on. On 4/28 the IGV recorded a bearish engulfing candle, as it was above a cup with handle pivot intraday, and the fund looked vulnerable. Monday it began the week with a bullish engulfing candle, and is attempting to put that negativity in the rear view mirror. It clearly outperformed today up 2%, compared to the SMH that was higher by 1.1%. On a WEEKLY timeframe last week provided some light as to the surge below in softwares favor on the ratio chart compared to the semis, as the IGV rose .5%, while the SMH fell 3.4%. Software has an advantage as to where its sits just 10% from most recent 52 week highs, whereas the SMH is 15% off its most recent yearly peak. As I always like to say competition brings out the best in things, and do not expect semis to just lay down and die.