ChartSmarter Wednesday Game Plan 3/9/16

Markets were in retreat mode Tuesday as the S&P 500 fell more than 1% after its first 5 day winning streak since 9/29-10/5/15 period where the index rose more than 5%. After that run it fell for one day before resuming its uptrend which sent it north of 2100 in early November. The S&P not surprisingly has ran into stiff headwinds at the very round 2000 number which also happened to be the 61.8% retracement. The Nasdaq took an even bigger bruising declining 1.3% and we know that is a good gauge as the the risk gauge at the current time. Looking at the sectors which were the hardest hit and it was the energy and materials groups each falling almost 4% (utilities were the only sector to gain today and staples and telco were close to UNCH demonstrating a return to defensive nature). Apparently the correlation with the averages is still pretty strong. Not helping was overnight news from China and CVX slicing capex into 2018. Some foreshadowing of the frothiness was present with the low quality names absolutely ripping higher, until today. For example names like WLL gained more than 83% last week, NOT a typo, and today was lower by 15%. SDRL was higher by 216% last week and today gave back 20%. More established names like EOG and PXD fell 4% Tuesday. Some plays that may benefit from cheaper oil/gas prices are names like TTC that we profiled in this Mondays Game Plan. The stock shrugged off a soft tape Tuesday which could be a good sign if the benchmarks can continue their recent uptrend. If not the bears could “mow down” this name, pun intended.