ChartSmarter Friday Game Plan 4/4/14

Markets were slightly bifurcated Thursday with the S&P 500 essentially flat, but the Nasdaq dropping almost 1%. Volume was soft, but the price action was not. The tech benchmark did find 50 day support today which may provide a bounce, but looking back upon the last 3 times it recaptured that line, there were powerful moves for a decent amount of sessions following. On 6/27/13 when the 50 day was recouped it rose 13 of the next 15 days. On both 10/10/13 and 2/7 it rose 11 of the next 14 sessions and on each of those 3 occasions the 50 day was not touched for many weeks after. Is a test so soon after retaking the line an ominous sign? The Nasdaq after all that bashing is still up on the week by 2%, and the S&P 500 by 1.7%. Perhaps a silver lining to it all is the weekly performance of the important small cap group, measured by the S&P 600’s 2.9% weekly advance. The IBB was certainly a culprit to the Nasdaq’s softness as it fell almost 3% today. The ETF looks as if it is in the midst of a bearish head and shoulders pattern, and a dead cat bounce would complete the right clavicle near the round 250 area, which would align with 50 day SMA resistance. Software, at the expense of sounding like a broken record weighed down the Nasdaq too, demonstrating that weak groups usually continue to be so. That does not mean names in the sector are not tradable as DATA that we mentioned earlier in the week may present an opportunity at its 200 day at the round 70 number. Add WDAY as well as it may receive some bids off its own 200 day just above the round 80 figure.