ChartWatchers

Too Much Information Running Through My Brain

Hello Fellow ChartWatchers!

The markets all moved higher this week with the Dow setting a new all-time high on Friday and the Nasdaq moving to within spitting distance of 5000.  Since the start of 2015, the Nasdaq has been on a tear, gaining over 4.6%.  Here's a link to our Major Averages PerfChart that shows YTD performance so far.  For more on the markets, skip on down to John Murphy's and Arthur Hill's commentary.  I'm going to spend the rest of this article talking about how to get the most out of all the market commentary we put out each week.

Too Much Information Running Through My Brain

Things were much simpler back in 1999.  We just had one thing - the ChartWatchers newsletter - this newsletter!  Now-a-days things are a tad more complex.  DId you know that we post, on average, 16 blog articles a week?  We also pump out 4 hours of webinar time each week.  And both of those numbers are guaranteed to increase later this year (and next year, and the year after that...)   There's sooooooooo much content to keep up with.  What's a "Fellow ChartWatchers" to do!?

The key to getting the most out of all this information is to prioritize the content that you enjoy ahead of content that doesn't do it for you.  To help with that, let me review all of our current blogs and webinars and give you some advice on what to read if your time is limited.

Disclaimer:  We - StockCharts.com - are not financial advisors.  We do not make specific buy/sell recommendations or stock picks.  We don't have a track record.  If you think we are recommending that you buy or sell something, re-read what we said.  We don't do that.  Instead, we try to help you understand the higher-level forces in the market and how you can use charts to make better investing decisions.  That is always our goal.

OK - with that out of the way - where should we start?  For the purposes of this article, I'm going to assume that your time for reading market commentary is limited.  (If you have tons of time, great!  Just read everything.)  Given that, how should you prioritize your reading?  Here's a list that should help.  Start at the top and read as many things as you want.  Stop whenever you run out of time/interest.

1.) ChartWatchers!   Hmmm... It looks like you are already doing that right now. Excellent! As a reminder, ChartWatchers is our free, twice-monthly newsletter that we've been emailing out since 1999.  It contains articles from John Murphy, Arthur Hill, Greg Schnell, me, Carl & Erin Swenlin and much more.  It also helps you keep up with the latest improvements to the website.  You can use the form at the bottom of our homepage to subscribe (but I bet you already did!).

2.) Read John Murphy's Market Message - The Market Message is our premiere market commentary area.  John Murphy is the master of technical market analysis.  If the question is "Chip, I only have time to read one of the blogs on your site, which should it be?" the answer is easy.  "Read the Market Message."  (For examples of John and Arthur's work, see below.)   To read the Market Message on a daily basis, you need to be a member of StockCharts.com.  Any membership level works.  Just log in and click on the "Market Message" tab at the top of any page.  The latest articles will be listed at the top of the page.  Below that are areas for Arthur Hill's optional (but very cool) Market Message videos as well as his recent "Art's Charts" articles.  Art's Charts is a side-blog that Arthur Hill updates every morning before the market opens with shorter-term analysis and ideas.  Definitely worth a read if you have time in the morning.

3.) Review Martin Pring's Market Round-Up - Martin Pring and Greg Schnell provide an international, multi-market view of things twice a week that is also extremely valuable.  If you want to know how the US is doing relative to other countries, or you want to understand what is currently going on in the important commodity markets, this is the blog for you.  Like the Market Message, this blog is available to all StockCharts members regardless of service level.  To see the latest article, click on the "Blogs" tab at the top of any page and then look for a green article summary with Martin's picture in it.  Here's a direct link to the Market Round-Up blog.

4.) Read the DecisionPoint blog - this free blog contains Erin & Carl's latest timing observations and thoughts about where the US markets are headed.   This is the free DecisionPoint blog that you can find on the "Blogs" page.  We also have two members-only DP blogs that contain detailed reports and data tables that back up Erin & Carl's analysis, but those can be a little overwhelming at first which is why I recommend starting out by just reading the free "DecisionPoint" blog instead.

5.) Into Self-Improvement? Read Gatis Roze's and/or Greg Morris' blogs - Both of these blogs are full of sage advice from experienced financial pros.  Both blogs challenge "conventional" wisdom and will make you think.  Often, they contain articles about the non-sexy - but VERY important - aspects of trading and investing that everyone ignores. Gatis' blog is called "The Traders Journal" and Greg's is called "Dancing with the Trend."   Both blogs contain "timeless" articles that will be just as valid in 1 year (or 10 years) as they are today.

6.) Love Technicals?  Greg Schnell's blog is for you -  Don't let the name of free Greg's blog - "The Canadian Technician" - fool you.  Greg's a prolific writer and covers most markets, not just Canada.  As just one example, recently Greg wrote a great 6-part series on Market Manias

7.) Bored? Take 30 seconds and review "Don't Ignore This Chart" - this free blog is updated every day with one chart and one paragraph.  A "quickie" chart that might make you pause and think and maybe even learn something.

8.) "..and the rest!" - there are 5 other great free blogs on our site including "RRG Charts," "Scanning Technically," "Step-by-Step," "Top Advisors Corner" and my own un-biased personal favorite, the "Chip Anderson" blog.  Don't get me wrong, these are all awesome and worth reading - but if you are short on time, you can save them for later if you want.

Again, you'll find links to all our commentary articles on the "Blogs" page.  Most of it is free for everyone to read.  Members can also visit the "Market Message" page to see John and Arthur's work.

One last thing - If you find yourself reading a particular blog often and you enjoy its content, be sure to "Subscribe" to the blog by clicking on the "Email updates" link on the right side of the blog's pages.  As a subscriber, you'll get email notifications whenever a new article is added to the blog.  Subscribing is also the #1 way you can show your support for an author's efforts.  They LOVE their subscribers!

I sincerely hope this overview helps you get even more value from StockCharts!
- Chip

P.S. I did a presentation about this same material on Saturday's "ChartWatchers LIVE" webinar.  Gatis Roze also stopped by during that talk.  You can watch the video recording by clicking here.

Nasdaq Nears Test of 2000 High

The monthly bars in the chart below shows the Nasdaq Composite ending the week just 177 points (3.5%) from its March 2000 intra-day high at 5132. [It's only 93 points (1.9%) from its 2000 closing high at 5048]. There's little doubt that it will reach that major milestone in short order. The question is what will happen when it gets there. It's not unusual for a major index to encounter some profit-taking when it reaches a major previous peak. But I doubt it will mark a major top. Although it's currently the only U.S. stock index that hasn't hit a record, that doesn't mean that it hasn't done as well as the others. It's actually done much better. It just had more ground to make up. The Nasdaq lost nearly -80% between 2000 and late 2002, while the S&P 500 and Dow lost -40% and -20% respectively. Since the 2002 bottom, the Nasdaq has gained 320% versus an S&P 500 gain of 160% (the Dow rose 140%). Since the spring 2009 bottom, the Nasdaq gained 260% which outpaced an S&P gain of 187% (and the Dow's 156%). That stronger Nasdaq performance can be seen by the rising Nasdaq/SPX ratio (gray area) since the 2002 and 2009 bottoms. The fact that the technology-dominated Nasdaq is leading the market higher argues for continuation of the secular bull market. So does stronger action in foreign markets.

- John

Defensive Stocks Lagging Although One Group Poised For Rebound

We've seen a very nice rally in U.S. equities during February, erasing all of January's losses with most of our major indices now breaking out to all-time highs.  The NASDAQ has been leading the charge and that indicates that we're in a "risk on" environment, which is bullish for equities.  Confirming that bullish environment is the relative performance of consumer discretionary stocks (XLY) vs. consumer staples stocks (XLP).  In my last article, I provided a chart of the XLY showing the breakout that occurred in early February.  Home construction ($DJUSHB) was a leader during that breakout and the rally in discretionary stocks has continued the past two weeks.  More importantly, the ratio of the XLY:XLP has been on the rise.  This tells us that traders are much more interested in the discretionary side (aggressive side) of consumer stocks.  That could change in the near-term, but before I explain further, take a longer-term look at how this ratio has performed:

Over the last year, the XLY:XLP ratio has been trending lower, which generally I'd consider to be a bearish development.  But relative charts can consolidate in continuation patterns just as individual stocks and indices do.  You can see the ascending triangle that printed during 2011 and 2012, just prior to consumer discretionary stocks exploding higher in 2013.  The past year appears to have set up a bullish wedge, the breakout of which is likely to lead to a strong discretionary sector throughout 2015 - at least based on current technical signs.

The recent selling has taken place within the confines of an uptrend.  Note that each time the DJUSHN has bottomed on its weekly chart over the past couple years, we've seen an RSI in the 40s.  On Friday, the weekly RSI was just beneath 48.  The green circle highlights an area that I'd watch closely.  Price support can be seen in the 650s while the rising 50 week SMA is at 653.

One stock in this industry group has been under tremendous selling pressure lately but is testing major price and gap support.  I'm featuring this stock as my Chart of the Day for Monday, February 23rd.  If you'd like to check it out, simply CLICK HERE (http://www.investedcentral.com/public/chart-of-the-day.cfm) to register - it's FREE!

Happy trading!

Tom Bowley
Chief Market Strategist
Invested Central

Ebay (EBAY) Wears Out The Buyers And The Sellers At This Auction

There is a relatively new song "Its all about the base" that jingles in my head every time I see these big broad trading ranges set up. Ebay is destined to be a classic technical analysis story when it breaks out from this consolidation. FireEye (FEYE) just broke out of one for a recent example.

On September 30th, 2014, Ebay Inc. (EBAY) announced that they were going to split out Paypal into a separate company under a new IPO. I couldn't find a date for the IPO, but the stock has been waiting for something. The only thing that paces back and forth more is a momma bear looking for her cubs. In a world of buy and sell, Ebay's stock couldn't be more trying. Indicative of an auctioneer running up the price only to slam the gavel and announce sold, this stock is clearly in that rhythm. As a short term trader, you need to trade this on the location of the stock price relative to the channel. Buy on the lows, sell near the highs. Buy on the lows, sell near the highs. Buy on the lows, sell near the highs.

Continue reading "Ebay (EBAY) Wears Out The Buyers And The Sellers At This Auction" »

Adding a Systematic Touch with P&F Charts

Chartists looking to filter small price movements and add a systematic touch to their analysis can turn to Point & Figure charts. Chart 1 shows a 60-minute P&F chart for the **S&P 500** and each box is five points. With a traditional 3-box reversal setting, this means a move greater than 15 points is needed to reverse a column. Note that the X-Columns represent rising prices and the O-Columns represent falling prices. Even though this P&F chart is based on intraday prices (60 minute), it **extends back to mid October and captures the medium-term trend quite well**. Before looking at the analysis, note that the red lines are bearish resistance lines drawn down at 45-degree angles. When prices break above a bearish resistance line, a blue bullish support line is drawn up at a 45-degree angle. This means prices are always above or below one of these lines. 

The trend line signals provide a systematic element to chart analysis. A break above the bearish resistance line is bullish, while a break below the bullish support line is bearish. We have seen three signals since mid October and the current signal is bullish. Notice how the index broke above the bearish resistance line with the surge above 2025 in early February. A new bullish support line was then drawn from the low of the move and it extends up at a 45-degree angle. These systematic signals can also be used to establish a trading bias for a shorter timeframe. And finally, note that P&F charts are excellent for marking support and resistance zones. The lows extending back to December mark a support zone in the 1975-1990 area. A break below this zone would call for a reassessment of the long-term uptrend. 

Utilities Sector Failing

On Friday's DecisionPoint Alert Report, the Utilities SPDR (XLU) went on a Neutral signal. It's sister, the equal-weight Rydex version (RYU) remains on a BUY signal. It appears that it will flip next week to a Neutral signal as well.

Continue reading "Utilities Sector Failing" »

London Calling, Part Deux

Hello Fellow ChartWatchers!

Friday's jobs report threw things for a bit of a loop as the markets all moved lower on the final day of the week.  But all-in-all it was a positive week for every major average with the DJIA leading the way up over 3.8%.  Later in this newsletter, John Murphy will explain the implications of Friday's jobs report on the bond market and then Arthur and Greg will look at the sector consequences.  On the other hand, I need to use the rest of my article to tell you about our latest major announcement...

London Calling, Part Deux

Long-time StockCharts members may recall that back in late 2010 we started providing London Stock Exchange stocks on our charting service.  Unfortunately, we began offering those stocks right around the time that the Greek financial crisis deepened causing investors to lose interest in European stocks.  In mid-2011 we discontinued our LSE service due to a lack of interest from customers.  At that time, I promised that we'd eventually bring back LSE stocks and today, I'm thrilled to announce that we've done just that.

Like before, LSE stocks have ticker symbols that end with ".L" - so, for example, Lloyd's of London has the symbol "LLOY.L" on our website.  Also, like before, we've started things off slowly by first offering LSE stocks to all of our users for free(!) but with a 15-minute delay on the quotes.  In the next couple of months, we will start providing real-time LSE price charts for people that are interested in that.

We currently have all of the "major" LSE stocks in our system.  If there is an LSE stock that you are interested in that we do not have, just head over to our Symbol Request form and let us know.  We'll try to add any missing symbols as quickly as possible.

We have daily/weekly/monthly history for these stocks going back to 2003.  In addition to those interday periods, members can also create delayed intraday charts (i.e., 1-, 2-, 5-, 10-, 15-, 30- and 60-minute charts) for LSE stocks; however, it will take a couple of weeks for the historical data for those bar periods to build up in our databases.

LSE stocks are also fully supported in our Scan Engine and in our Alert Engine so members can create and run technical scans and receive technical alerts for them as well.  For instance, you can use "[exchange = LSE]" and "[country = UK]" in your scans now.  We also have added an LSE column to our Predefined Scan Reports.

Finally, the $FTSE index has also been upgraded to support delayed intraday data updates.

Watch for us to add more LSE-specific features to the site over time including - but not limited to - London MarketCarpets, LSE Predefined Scans, FTSE Stock Lists, LSE SCTRs and more.

Again, currently all of this new data is 1.) completely free and 2.) delayed 15-minutes.  For those of you that are looking for real-time LSE data, I will let you know when that becomes available - probably by the middle of the year.

Well then, pip pip!  Cheerio old chap!  Ta ta and what not!
- Chip

(Wait... what?  They don't say those things anymore?  Well, what do they say these days?  Just "Goodbye"?  That's bloody barmy!)

 

The Sectors Had Major Trend Changes This Week

The Utility sector has had major changes in the relative performance this week. It wasn't just Friday as there appears to be another major event that changed the focus.

First of all, let me describe the chart. When each of these are trending higher, Utilities are performing better than the other sector being compared to in each ratio. When these graphs start breaking trend lines, it is helpful to see the changes in the market. In the last week, this sector really started to let go. But the peak coincides with another major event that should be placed on every chart.


Chart 1

The major event that the peak coincides with is the new unbridled QE in Europe. This led a massive change in the sector rotation in the last two weeks. Based on my analysis of the markets this week, there is a large scale rotation away from defensive sectors similar to the move in 3rd Quarter 2012. What happened then? All the Central Banks did coordinated easing and the US went on to start QE Infinity as it came to be known. While these graphs broke before the announcement of QE, there was a lot of discussion leading into the July meeting and the Bretton Woods meeting in August. 


Chart 2

Lastly, how big was this trend away from Utilities that started in 2012?


Chart 3

With the exception of April 2013, Utilities under performed almost every other sector for 2 years. The red lines just starting on the right hand side of Chart 3 are from the first chart  (2014 - current) trend lines. The pinnacle top the last week of January 2015 on Chart 1 of these charts suggests a major change in trend. You may want to scroll back and look at the top chart. In the big picture, it shows the utilities trending up against most sectors in the last year. The number of Central Banks that have already eased monetary policy in 2015 is big! Zero Hedge lists off 16 Central Banks that have eased monetary policy in 2015. Be sure to check out my next article in "Martin Pring's Market Round Up" where I'll be discussing the major sector changes that are currently underway.

Good trading,
Greg Schnell, CMT

Strong Jobs Report Push Rates Higher

A strong jobs report on Friday pushed interest rates sharply higher all across the yield curve. The daily bars in Chart 1 show the 10-Year Treasury Note yield jumping to the highest close in a month. [Bond prices fell sharply as a result]. Short-term rates jumped even more. Chart 2 shows the 2-Year Treasury Yield jumping to a monthly high as well. That big jump in rates helped banks and brokers have a strong day, but caused heavy selling in rate-sensitive groups like REITs and utilities. Higher rates and a stronger dollar also hurt gold. The stock market ended the day on the downside after trading higher earlier in the day. Energy stocks were the week's strongest sector which helped stocks during the week.

Consumer Discretionary Stocks Fuel Rally

There's been much said and written about rapidly-declining crude oil prices ($WTIC).  But one thing makes perfect sense to me.  When American consumers save TONS of money when filling up at the pump, they tend to spend it elsewhere.  It's simply what we like to do - SPEND!  So it's not too surprising to me that many consumer discretionary companies are beginning to see huge benefits in terms of price appreciation.  First, check out the breakout on Friday on the XLY:

The Federal Reserve, for the past several years, has been flooding the market with liquidity through its quantitative easing (QE) programs.  One of their mandates has been to keep interest rates artificially low for an extended period of time to encourage the rebound of home prices and to help beleaguered home construction stocks.  Their plan has been paying off.  Home construction stocks ($DJUSHB) have been in a very bullish uptrend during the entire bull market run off the 2009 lows.  Not only have home construction stocks been in a clear uptrend, but they also have been consolidating in a bullish ascending triangle pattern for the past two years.  A critical breakout occurred on Friday above the 550 level with this pattern measuring to perhaps the 710 level.  The S&P 500 tends to perform exceptionally well when home construction stocks are on the rise.  Check out this chart:

Strength in home construction stocks and the above breakout are likely to lead to outperformance in the next few months in this group.  We will be adding several new stocks to our EarningsBeats.com Trading Watch Lists early next week, including one homebuilder that just blew estimates away recently.  If you'd like to try our EarningsBeats service, we're offering a one-time $.97 special for a month (normally $97) - just CLICK HERE.
 
Happy trading!

Tom Bowley
Chief Equity Strategist
EarningsBeats.com

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