Taking Full Advantage of ChartLists

Hello Fellow ChartWatchers!

The markets had a very good week last week and are trying to climb above lots of built-up resistance from earlier in the year.  On the Dow chart, that means that the index struggles each time it nears 18,000 - something it is doing once again.  Many of our commentators are skeptical however Tom Bowley is definitely NOT in that camp.  Skip on down to the articles in the rest of this issue to see why.

Taking Full Advantage of ChartLists

There are really three key reasons to become a StockCharts member:

  • Access to Intraday Data
  • Access to member-only commentary from John, Martin, and/or Arthur.
  • Saving charts into your account

There are lots of other reasons beyond those, but those are the three reasons cited most often by our members.  Of those three, the ability to save charts into an online account (which now-a-days could be considered to be "in the cloud") is the one that I think is the most misunderstood and misused.  So I thought I'd take a moment to explain how saving charts can make a huge difference in how you use the website.

Continue reading "Taking Full Advantage of ChartLists" »

S&P 500 Regains Its 200-Day Average

S&P 500 REGAINS ITS 200-DAY AVERAGE -- EQUAL WEIGHTED VERSION LAGS... This time last week, the S&P 500 Index had fallen back below its 200-day average and was testing chart support at its September peak at 2020 (and its 50-day moving average). It survived that test and regained its 200-day line this week. In so doing, its 3.27% gain was the biggest of the year. Large caps, however, which dominate the cap-weighted SPX, are still leading the market higher. The bottom chart shows the Guggenheim S&P Equal Weight ETF (RSP) still trading below its 200-day line. Since all stocks in the RSP are equally weighted, it gives less weight to larger stocks. A move back above its 200-day line would be a positive sign for it and the rest of the market.

Happy Thanksgiving!
- John

Four Reasons The Market Is Heading Higher

On the surface, the rout that took place in August has been completely reversed and, three months later, it's like nothing ever happened, right?  Wrong.  What has happened is that the S&P 500 rose from August 19th's close of 2079.61 to Thursday, November 19th's close of 2081.24 - less than two points - but the rotation underneath is the real story.  After the scare off the August lows and subsequent rally, the big question is.....is the rally about to end or are we on the brink of another significant rise in U.S. equities?  I believe it's the latter and here's why:

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Where Did Momentum Go? Nowhere.

The most recent bounce/rally was impressive, pushing prices toward overhead resistance at the November high or even to all-time highs. The problem is that during that rally, the Price Momentum Oscillator (PMO) didn't react. It did turn negative momentum to "positive" but barely. Take a look at the charts of the four major indexes that we track in the DecisionPoint Chart Gallery, in all of them momentum has been completely flat during this bounce. This suggests internal weakness. Additionally with the OEX and SPX, volume has not been with the rally either.

Continue reading "Where Did Momentum Go? Nowhere." »

Strong Earnings = Strong Performance

At EarningsBeats.com we focus squarely on stocks that beat earnings expectations and also have strong charts. We do this as we have found that companies who report strong numbers get a lot of attention which makes sense given the single most important attribute investors look for in a company is a strong bottom line.

For example, Heartland Payment Systems (HPY) recently reported their numbers and beat both earnings and revenue expectations. And as you can see below, shareholders were rewarded with a very nice move to the upside with the stock just hitting an all time high:

Not every stock that beats expectations explodes to the upside. For example, a company might report very strong numbers but guide lower going forward and get hammered in the process.Why? Because investors are always asking, "what's next?" But ultimately, if a company beats earnings expectations and guides higher, there's a strong probability the stock will go higher, and these are the ones you should be looking for.

We're entering a time of the year that is historically very favorable for stocks. And at this point the vast majority of the highly visible companies have reported their earnings. So as a trader you have an opportunity to benefit by gravitating to those stocks that are likely to garner the most attention.

We have a feature at EarningsBeats.com, our "Candidate Tracker" where we show those companies that beat earnings expectations and have solid charts. If you would like to see a sample just click here.

At your service,

John Hopkins

Some Apparel Retailers Start To Pop

Heading into Christmas, Apparel Retailing has been a pretty difficult industry group for those who were optimistic on it. This week saw a few apparel retailers start to surge. On Friday specifically, a few things changed that might give the group some power finishing out the year.  

First of all, Ross Stores (ROST) surged from being one of the middling stocks in the group to being one of the leaders. It has had earnings gaps in the past during a big uptrend and Friday was another gap up on earnings. The last earnings report was a gap down, but that was really the exception within the trend with today's resumption of gapping up on earnings.

Limited Brands (LB) has been one of the top-performing stocks in the group for the year and it continues to be one of the top performers. After breaking out to new highs in early October, it pulled back enough to close stops. On Friday, it broke back above the breakout level. The relative strength in purple is a little weak, but any further strength would be very bullish for one of the strong stocks in the group.

Foot Locker (FL)  has continued to perform well but recently pulled back as Nike did. Today it spiked up with NKE so there is a lot of tracking going on with NKE. If it can continue to resume the uptrend and the RS can outperform, this could lead to a big move.

The new winner on the retail apparel scene was Abercrombie and Fitch (ANF) that broke out of a big base Friday and I wrote about it in the Don't Ignore This Chart on Friday. Click here to see that article.  Abercrombie.

I think it could be a nice industry group to look for fast-rising stocks for the next few months. Some of the retail stocks maintain their strength through to the end of March so if this group was to do that, this could be a great time to look for an entry. The recent rise in volatility of the indexes suggests more volatility ahead. 

Good trading,
Greg Schnell, CMT


The Two Weeks that Weren't

The S&P 500 SPDR (SPY) acted just like a roller coaster the last two weeks. It took traders for a wild ride and then dropped them off right where they started - a little frazzled no doubt. SPY opened near 209 on Monday, November 9th, and then plunged to close near 202.5 the following Friday. The ETF formed a long filled candlestick (black) that reflected a week of strong selling pressure. SPY started the following week with an open just below the prior close, but quickly found its footing and surged back toward the open of November 9th. We now have a long hollow candlestick (white) showing a week of consistent buying pressure. Notice that the open of the prior black candle is equal to the close of the current white candle. 

Continue reading "The Two Weeks that Weren't" »

Another Painful Reminder - Hold Stocks into Earnings at Your own Peril

Earnings season has been in high gear the past few weeks with thousands of companies reporting their numbers. So far the results have been mixed but maybe better than most expected with the S&P now back to within striking range of its all time high.

One of the things we preach all the time at EarningsBeats.com is to avoid holding stocks into earnings reports. Why? Because you never, ever know how the market might react to a company's report.

If you want to see a prime example of the risk of holding a stock into its earnings report, look no further than Buffalo Wild Wings (BWLD) who reported their earnings recently.

Let me start by noting in the chart below that BWLD hit its all time high of $205.83 on September 23. It then proceeded to pullback to $173 one month later, so a 15% haircut. It bounced and tested its 20 day moving average near $185 from underneath just before its earnings release and remained well below that all time high in September. So to some traders there was the potential for some serious gains IF - and that is a BIG IF - BWLD knocked it out of the park. But, it didn't, and instead the stock fell over 17% on huge volume.

What's the lesson here? To avoid holding stocks into earnings reports because there's just no telling how the market will react to the numbers. It's always disappointing to dump a stock just before they report to see it soar on the results but believe me it's doubly painful to watch a position shrink by 17% knowing there's no getting it back anytime soon.

I'm going to be conducting a webinar with StockCharts.com's Senior Technical Analyst Tom Bowley on Wednesday, November 11 at 7:30 PM eastern. You are invited to join us for free. During the webinar we will be discussing the concept of finding companies that BEAT earnings plus have strong charts. So instead of rolling the dice into an earnings report we like to see the results and then pursue those that present the best reward to risk trading opportunities. Just click here to save a seat.

At your service,

John Hopkins

Stock End the Week Mixed, But Still In Uptrend

Friday's jobs report caused some minor profit-taking in major stock indexes, but not enough to alter the current uptrend. The chart below shows the S&P 500 dropping slightly Wednesday through Friday (but closing up for the week). I've pointed out that stocks are up against chart resistance along their summer highs and in a short-term overbought condition. That could lead to some backing and filling like we saw this week, but nothing too serious. The longer range trend remains positive. Initial chart support for the SPX is at 2060 which coincides with its rising 200-day moving average. Friday's mixed results for major stock indexes, however, masked big sector rotations beneath the surface. That was due mainly to the big jump in bond yields and its effect on various stock groups. It helped banks, brokers, and insurers, but hurt utilities, REITS, and dividend-paying consumer staples. The resulting jump in the U.S. dollar also had a bearish effect on gold miners and other commodity stocks. The rising dollar may also have contributed to this week's jump in small cap stocks which are starting to play catch up.

- John

Don't miss what else John had to say today!  StockCharts members can click on the "Market Message" tab on our website to see John's thoughts on what rising rates (and the surging US dollar) will do to the markets.


The Stock Trader's Almanac for 2016 is Here!

Hello Fellow ChartWatchers!

We're pretty busy today re-vamping our network security systems so I only have time for a quick post with two important points:

1.) The Dow has shot up a ton recently and is ready for a pull-back.

The MACD line shows faltering momentum - specifically, the MACD histogram is declining towards a bearish signal-line crossover.  In addition, the Dow is now in a huge zone of overhead resistance which is evident from the two big "Volume-by-Price" histogram bars sticking out from the left side of the chart.

Continue reading "The Stock Trader's Almanac for 2016 is Here!" »