ChartWatchers

US Stocks End Week on a Strong Note

A combination of factors pushed U.S. (and global) stocks sharply higher during the second half of the week. One big factor was the Wednesday Fed statement that it would be "patient" in raising rates next year. Another was a bounce in a very oversold oil market late in the week which gave a big boost to energy shares (which make up 8% of the S&P 500). Energy shares rose 9.5% and were by far the week's strongest sector. Material stocks (led by copper and aluminum) came in second with a weekly gain of nearly 5%. All other sectors gained on the week as well. Chart 1 shows the S&P 500 rallying sharply and nearing a test of its December high. Small caps also had a strong week. Chart 2 shows the Russell 2000 Small Cap Index breaking out to a new six month high. I wrote on Thursday that small caps usually start to do better in mid-December in anticipation of the traditional January Effect. Traders were also buying in anticipation of the traditional yearend Santa Claus rally. [Friday's unusually heavy trading was due mainly to the quarterly expiration of futures and options]. Foreign shares also jumped.

Business Support Services Index Breaks Out After Long Base

Stock market action played out the past two weeks almost perfectly according to historical plan.  In my last article, I discussed the bearish tendencies of equities from December 7th through December 15th and the S&P 500 promptly lost 85 points, or more than 4% during this period in 2014.  But the historical faucet seems to turn from arctic cold to blistering hot overnight as December 16th is the trigger point for the bulls from an historical perspective.  Right on cue over the past four trading sessions, the S&P 500 regained nearly every point that it had lost during the bearish period.  The net result was almost nil, but traders that were aware of the historical pattern were able to take advantage of both sides of the trade.  Pretty amazing, huh?

The good news is that the bullish tendencies don't typically end on December 19th.  In fact, the stock market remains historically bullish through the first three weeks of January so I don't see the overall bullish action letting up any time soon.  Where can we look for additional strength then?  Well, I'd start with industry groups that are breaking out and outperforming on a relative basis.  One obvious industry group that fits this criteria is the Business Support Services index ($DJUSIV).  Check out the chart:

There are a ton of positive technical developments here.  First, the DJUSIV has been in a base formation throughout 2014, so a breakout on heavy volume is a very bullish sign.  Also, on its most recent high in early December, a long-term negative divergence printed with a price trip to the 50 day SMA and a MACD trip to centerline support more likely.  That's exactly what we saw as the pink circles highlight.  Perhaps most important, there was finally a break of the relative strength down channel that the DJUSIV had been in since the first half of 2014.  So now we have a breakout on heavy volume after a long base with relative strength surging.  It's probably not a bad time to consider exposure to the group, especially if the DJUSIV pulls back near 360 to retest its breakout level.

I've included a company within this business support services space as my Chart of the Day for Monday, December 22, 2014 to hopefully take advantage of future relative strength from this group.  It's FREE so simply CLICK HERE to register and begin receiving your daily Chart of the Day.

Happy holidays and happy trading!

Tom Bowley
Chief Market Strategist
Invested Central

Creating a Workflow ChartList

Visual-Workflow-1With the release of several DecisionPoint ChartPacks (to learn more about them and how to install them click here), many users have expressed that they are overwhelmed by the quantity of quality indicator charts. This is not news to me, we had the same feedback from new users to the DecisionPoint.com website. The great news is that you can customize what you see on StockCharts.com, whereas on DecisionPoint.com you had to figure out the links and create a workflow from a static menu. You were limited to using browser bookmarks and favorites to save your charts and because of this, there was no 'click through' ability or annotations.

Many of you (like me) have your favorite or most important charts that you use consistently in your daily workflow. Rather than hunt for each of those charts within the DP ChartLists, why not find the ones you use regularly and create your own daily analysis ChartList. This will allow you to open up that ChartList and "click through" the charts you use one by one. Although this can take some effort to set up, the time you save will more than make up for the time used to set it up.

How do you start? First and foremost you need to quantify your daily routine. What do you look at first? Do you concentrate on one index or several? Do you go in-depth on one and then quickly review the high level charts on others? Here is a sample workflow that we will use to create a daily review ChartList. This workflow is the basis for the DecisionPoint Daily Blog (which will soon be coming to Stockcharts!).

Concentration/Review Order: SPX, Gold, Dollar (UUP), Oil (USO) and Bonds (TLT).
Analysis Breakdown: SPX - 10 min bar, daily bar, weekly bar, monthly bar; Gold - daily bar, weekly bar, monthly bar; Dollar (UUP) - daily bar, weekly bar; Oil (USO) - daily bar, weekly bar, monthly bar; and Bonds (TLT) - daily bar, weekly bar, monthly bar.
Indicators on charts: EMAs (as appropriate to timeframe), Volume (as applicable) and PMO
Indicator Charts: Volatile Short-term (CVI, Participation Index, Net Breadth/Volume); Short-term (STVO, STO-B, STO-V); and Intermediate-term (VTO, ITBM, ITVM)

First, I need to create and name my new ChartList. You'll find the "Create a New List" at the top of your ChartLists box on the "Members" page.

Create New list

 I'll call it "00 - Daily Workflow". I put the double zeros at the front to make sure that it will sort to the top and be my first ChartList. After clicking enter, I end up on this landing page that gives me options on how to populate the new list. Since my list is very specific, I'll need to call up each chart and save it to the list, so I won't use this page this time.

After creating new list page

The first chart I need is the 10-min bar chart for the SPX. I know that chart is already pre-created and is a member of the DP Intraday ChartPack. So I go to the Intraday ChartList.

Select DPI

I find and click on the S&P 500 intraday chart.

Select SPX 10min

After the chart is opened, I need to save it to my new ChartList "00 - Daily Workflow". So I click on "save as", select the ChartList and then name it. I chose "001" as the start of the name to ensure it shows up first within this ChartList.

Name chart

Now I need to find my next couple of charts. The SPX daily, weekly and monthly as well as the Gold, UUP, USO and TLT charts are in the DP Trend and Condition ChartPack, so I can open them from there.

Select From TC list

Within the "DPTC -1020-S&P 500" ChartList I see that the next group of charts are ready to go. I open each and following the procedure above, I save each in my new "00 - Daily Workflow" ChartList, making sure to name them in order "002" "003" etc. so that I can preserve the order that I like to review the charts in.

Inside spx tc list

Save spx daily chart

Once I've opened and saved all of the charts in my workflow, the completed "00 - Daily Workflow" ChartList summary looks like this:

Completed workflow list

Now I can choose to view this list in ChartBook format and click through each chart quickly to do my regular analysis each day.

View new list as chartbook

First page of chartbook

One of the other major advantages to creating a specialized workflow ChartList is that I can make annotations on these charts, save them and view them everyday with those annotations which will update along with the chart. Later if I want to add or subtract charts from my workflow ChartList, it is easy to do in the "edit" ChartList mode:

Screen Shot 2014-04-15 at 12.39.04 AM
Screen Shot 2014-04-15 at 12.39.18 AM

Creating specialized ChartLists will help you to easily find the charts you like to look at daily. It may seem difficult and time-consuming, but it doesn't have to be. If you look at the same charts almost everyday, you are already calling them up or maybe have them created in another ChartList. I find that quantifying your daily routine on paper first will make creating the workflow ChartList much easier.

A workflow ChartList will keep you focused on what is most important to you and will likely improve your analysis technique in the process.

Happy Charting!
Erin

 

 

 

Trend Line Breaks - The Difference In The Display Makes The Timing Critical

Technicians are a serious bunch. When we get a trend line break to the upside or downside, it is very critical for us. It is our trigger. However, the way the data is displayed is very important as well.

Here is a chart of 4 related subjects on a performance chart which shows the movement in % terms. They rise and fall together over time but the percentage change is different. A one-to-one fit? No.  The components are the Emerging Markets ETF (EEM), the Emerging Markets Currency ETF (CEW), Brent Crude Oil ($BRENT) and the Hang Seng Index for Hong Kong ($HSI).  They have reasons to be correlated. Crude Oil is one of the worlds largest commodities and is used in every country. The Currency ETF of Emerging Markets is highly correlated to commodities. When commodities are doing well, so do emerging markets. Hong Kong is one of the largest business centres in the developing world.

So the recent plunge in crude oil has also been showing up in the other 3 charts, but not to the same extent.

Let's stack the graphs and show in the information based on actual price.

Continue reading "Trend Line Breaks - The Difference In The Display Makes The Timing Critical" »

Why a StockCharts.com Membership is More Valuable in 2014 Than It Has Ever Been

Hello Fellow ChartWatchers!

Stocks rose this past week with the large-, mid-, and small-cap S&P indexes all finishing up around 3.2%.  For the year, the S&P 500 is up over 12%, the mid-caps are up 7.98% and the small-caps are up only 3% however those numbers are misleading because, over the past 3 months we've see a surge in strength from the small caps.  Since October 1st, small-cap stocks have outperformed mid-cap stocks by 2.2% and large-cap stocks by 3.0%.  And, as Arthur Hill pointed out in yesterday's Market Message articles (which members can see here), micro-cap stocks (IWC) are currently leading things higher.

Arthur, John, Greg, Carl, and Tom will talk more about that in just a minute, but I wanted to take a minute a make sure everyone is aware of all the things we added (without raising prices) to StockCharts.com this year.

Why a StockCharts.com Membership is More Valuable Now Than It Has Ever Been

At StockCharts.com, our strategy is to continually increase the value of the website without increasing prices.  That's how we remain competitive in the cut-throat world of the Internet.  It's how we reward our loyal fan-base.  Essentially, it is what we do.  2014 was no exception.  In fact, we've added more content to our website in 2014 than in any previous year; something I'm very proud of.  Here's a list of just some of the great things we added in 2014:

  • Webinars! - Our two experimental webinar series have been HUGE successes.  Have you attended one yet?  So far, Arthur Hill is giving live webinars on Tuesdays at 1pm Eastern and Greg Schnell is doing his live webinar on Thursdays at 4:30pm Eastern.  Hundreds of people have attended so far and the feedback from them has been incredibly positive.  We plan on continuing these programs into 2015 and plan on expanding our webinar line up so that other authors and commentators can get involved too.  Interested?  Why not click here to register for Arthur's next webinar on this coming Tuesday?
  • Martin Pring's Commentary - I still can't believe that Martin joined our commentary team this year.  For no additional cost, members can now read (and hear) Martin's expert commentary in his "Market Roundup" blog and as a frequent guest during Thursday's "Market Roundup" webinars with Greg Schnell.
  • Martin Pring's Market Indicators - Martin also brought with him his coveted collection of market indicators including the Pring Special K, the Pring Deflation Index, and the various Pring Diffusion indicators.  To see a list of Martin's indexes, search for symbols starting with "!PR".  For more information on how to use them, search ChartSchool for "Pring" (or just click here).  And read Martin's blog for examples of how he uses them.
  • Greg Morris - Greg is now in the process of updating his Market Breadth Indicators book using his new blog on our website.  Anyone can now read Greg's updates for free.  In addition, as part of updating Greg's book, we've added a large number of new breadth-based Market Indicators to our system.
  • RRG Charts - These new charts are amazing and you can only find them live on the Internet here at StockCharts.com.  Created by Julius de Kempenaar  - who is also blogging about them exclusively on our site as well - RRG charts dynamically show you relative strength for any group of stocks/ETFs/indexes that you want.  If you haven't seen them in action yet, check out this article from Arthur Hill and see how useful they can be.
  • DecisionPoint Chart Gallery - Our merger with DecisionPoint.com was one of the highlights of 2014.  As part of that merger, we created the DP Chart Gallery to give everyone easy access to the best charts that DecisionPoint had to offer - their "Greatest Hits" as it were.
  • All the DecisionPoint Market Indicators - Over 400 additional indicators were added to our website as a part of our merger with DecisionPoint.  We are still in the process of documenting them all!
  • Carl & Erin's Free DecisionPoint Blog - As soon as the merger was announced, Carl and Erin began blogging on our website in the "DecisionPoint" blog.  It's a great source of ideas for how best to use all of the new content that they brought to our site.
  • DecisionPoint Reports, Trackers, and Spreadsheets - Did you know that each day StockCharts members can access more than 20 high-quality, expert-level reports about the technical condition of the stock market?  These reports (and the corresponding spreadsheets) show you ALL of the important market timing signals and changes that DecsionPoint has used for over 20 years.  They are a huge "hidden gem" on our website that all members should check out.  They can be found in the DP Reports Blog and the DP Trackers Blog.
  • John Murphy's First eBook - We purchased the rights to John's classic book "Charting Made Easy" and immediately re-released it on our website for free.  Yep, free.  Now anyone can read John's great introduction to chart analysis just by visiting this link.
  • SCU Seminars - We presented live StockCharts University training seminars in 5 different locations to over 600 attendees.
  • ChartCon 2014 - In August, we hosted over 400 people for our ChartCon 2014 conference.  It was a terrific event with presentations over 2 days from experts like John Murphy, Martin Pring, Richard Arms, Alexander Elder, Arthur Hill, Gatis Roze, Tom Bowley and many others.  The reviews from attendees were amazingly wonderful.
  • ChartCon 2014 Videos - Couldn't make it to ChartCon?  No worries - we video taped it for you!  You can order the ChartCon videos from our online store.
  • Pinnacle Breadth and Commodities Data - In October, we completed a deal with Pinnacle Data that allows us to use their amazing historical database of market breadth data and commodities data on our charts.  All at no additional cost to you.  No need to thank us.  Just keep enjoying the best charting database available anywhere.
  • Top Advisors Corner - Another "hidden gem" that we got in the DecisionPoint merger is the "Top Advisors Corner" blog that features free articles from subscription-based newsletter authors.  For the price of a small sales pitch, you can now read even more technical content from even more great technical analysts.
  • Greatly Improved Documentation - We've been rewriting all of our documentation.  You can find the new version by clicking the "Help" link in the upper right corner of any of our pages.  Very soon now, the old "Support" area will be disappearing in favor of this new documentation.
  • Corporate Action Event Markers - Use the "Events" overlay on our SharpCharts to see when splits/dividends/distributions have affected the stock's price.  Here's an example.
  • "Difference" Symbols - Use a hyphen to subtract one symbol from another and chart the result.  Here's an example.
  • The "Ranger" Interactive Date Control - Interactively change the start and end dates for your chart by simply clicking and dragging.
  • Expanded SCTR Coverage - we now rank over 5,000 different stocks and ETFs using our exclusive SCTR Ranking system.
  • RANK BY Scans - These things are awesome.  Members can now designate how they want their scan results to be sorted on the results page by adding a "RANK BY" clause to the end of their scan.  This has the added benefit of giving you indicator values on the scan results page.
  • Solid Candlestick Colors - Those of you that prefer candlesticks with different colors for up vs. down, your wish is our command.
  • The New StockCharts Answers Network (s.c.a.n.) -  In June we released a completely new version of our user-to-user help area called "The StockCharts Answer Network (s.c.a.n.)"  Be sure to check out the results and register to participate if you have a question or you think you can help others.
  • And there's more...  Gatis Roze's amazing ChartPack updates, Greg Schnell's huge volume of great commentary, John Murphy's amazing October market warning, our charts in Alexander Elder's new book, our 15 year anniversary celebration, 5 new ChartPacks from DecisionPoint, sortable CandleGlance charts, over 11,000 Facebook followers...
  • ...and much, much, much, much more!

Hopefully, you've been able to take advantage of many of the things we offer already.  If not, I urge you to take some time over the holidays and explore some of these new features of our site.  Hopefully you will agree that StockCharts.com offers an amazing amount of value in return for your subscription.

Speaking of subscriptions, our Holiday Special will be ending soon.  If you are not a member, join now.  If your account ends within in the next 6 months, you should definitely renew your account now and take advantage of our long-term pricing deals.  14 months of service for the price of 12 is our most popular offer.  If you wait to renew, you may miss out of those savings.

Happy Holidays everyone!
 - Chip

 

Two Nasdaq 100 Stocks With RS and Bullish Price Action

Chartists can improve their odds by looking for stocks that show relative strength and bullish price action. It is a two-pronged approach that has stood the test of time. I use relative strength to narrow the field and then look for charts with bullish signals. The first image shows a Relative Rotation Graph (RRG) with the top ten stocks in the Nasdaq 100 ETF (QQQ) and QQQ as the benchmark. Together, these ten stocks account for almost 50% of QQQ and can be considered the main drivers of the ETF. Interpreting the RRG chart is simple. Stocks in the green are leading and stocks in the red are lagging. Gilead, Facebook, QualComm and Amgen are showing relative strength. In particular, FB and GILD are in the top right of the RRG chart and at the top of the relative performance list just below the chart. Note that this is a daily RRG chart that covers the last two weeks, which can be considered short-term. 

Continue reading "Two Nasdaq 100 Stocks With RS and Bullish Price Action" »

German DAX Closes at Record High, US Dollar Index Hits Eight-Year High

German stocks sold off Thursday after the ECB delayed further monetary easing until the first quarter. Later reports that more monetary stimulus might come as early as January helped boost European stocks which rallied sharply on Friday. Chart 1 shows the German DAX Composite Index jumping 2.4% on Friday to reach a new record. Other eurozone stock markets jumped as well. France rose 2.2%, Spain gained 2.6%, and Italy 3.4%. Friday's strong jobs report in the U.S. may have also improved market sentiment in global markets. The only laggards were oil producers like Brazil, Canada, and Russia. Oil importers like China and Japan hit three and seven year highs respectively. That puts most global stock markets on a sounder footing. Most foreign currencies fell however as the U.S. Dollar hit a new eight-year high. That was due mainly to a big jump in U.S. rates on Friday following the strong jobs report.

The monthly bars in Chart 2 show the U.S. Dollar Index ending the week at the highest level since 2006. The USD closed slightly above its 2009 and 2010 highs. Any chart reader will recognize that as a major upside breakout. The USD had fallen between 2002 and 2008 before bottoming. It has traded sideways since then in an apparent bottoming formation. This week's upside breakout has completed that bottoming formation and signals the likely start of major uptrend in the U.S. currency. Chart 2 suggests that the bull market in the dollar has a lot further to go both in price and time. Dollar strength is one of the main reasons why commodity markets are in major downtrends. It also explains why commodity exporters are underperforming and commodity importers outperforming on the global stage. The main reason for dollar strength is the growing discrepancy by rising U.S. interest rates and low foreign rates.

Small Caps Ready to Make a December Run?

As a student of stock market history, I'm often astonished by historical facts about market performance.  December is generally a very solid month for equities and no index benefits more from this seasonal bullishness than the Russell 2000.  Since 1987, the Russell 2000 has risen 24 of 27 years during the month of December, sporting a robust 42.45% annualized return.  It is BY FAR the best month of the year for small caps with the second best month - April - lagging way behind with an annualized return of 19.42%.

Of the 3 negative Decembers on the Russell 2000, there was a 0.23% loss in 2007, a 0.60% loss in 2005 and a 5.72% loss in 2002.  So really the 2002 year was the only year since 1987 where small caps have performed very poorly.  That's 1 bad year out of 27.  Small caps gained ground in December every year from 1987 through 2001.  Being overly bearish small caps during December has proven to be a very poor trading strategy.  So does this mean we should be ALL IN on the long side?  Of course not.  First of all, history is just that - history.  It provides us no guarantees about future performance.  But even beyond that limitation, one third of December actually is quite bearish for small caps.  This may be the most amazing historical statistic of all.

For purposes of historical market performance, December can be broken down into three periods as follows:

1st through 6th
7th through 15th
16th through 31st

The performance between these these periods is staggering.  Take a look at the annualized returns by period:

1st through 6th:  +25.81% (up 20 times, down 7 times)
7th through 15th:  -22.77% (up 5 times, down 22 times)
16th through 31st:  +78.84% (up 24 times, down 3 times)

A couple more historical facts:

Remember, it was pointed out above that the Russell 2000 moved higher every year from 1987 to 2001, or 15 consecutive years.  Well, consider that this same index LOST value every year from 1988 to 2003, (or 16 consecutive years!) during the December 7th through the 15th period.   That is quite remarkable.

So why bring this up?  Well, check your calendar because the December 7th through 15th period starts on Monday.  This would be the time where we begin to see some selling, if it's going to happen in December.  Here's the current technical look at the Russell 2000 as this potentially bearish period begins:

There is a long-term negative divergence still in play and a couple of key price resistance levels overhead that must be negotiated.  So if the bulls are going to take charge next week, they're going to have their work cut out for them.

Over the next week to ten days, it makes sense to look for small cap stocks that have been performing well, but poised for some short-term selling.  One such stock is Tessera Technologies (TSRA), part of the very hot semiconductor industry.  It's beginning to show a weakening daily MACD along with an extremely overbought RSI at 80.  If it sells off in the week ahead, it could become a much better reward to risk trading candidate on the long side as we wrap up 2014.

I'm featuring another small cap stock stock for my Monday Chart of the Day.  This Chart of the Day is free and I'm also having a webinar this Wednesday that discusses how I scan for and analyze stocks before including them as Charts of the Day.  To register, simply CLICK HERE

Happy trading!

Tom Bowley
Chief Market Strategist
Invested Central

How to Take Advantage of StockCharts.com's Holiday Specials!

Hello Fellow ChartWatchers!

Well, it is December now and the stock market is STILL in record territory!  The rally that started way back in October 2011 continues to roll on, seemingly without a care in the world.  Skip on down to the articles that follow mine for more information and commentary about that whilst I explain how you can get the most out of our current Holiday Special.  This advice applies to both current members and non-members.

The What, The When, The Why, and The How of our Holiday Special

The What: From now until the end of the month, if you place an order for 6 months of any service, we'll give you a 7th month for free.  If you place a 12 month order, we'll give you 2 additional months for free.  And if you place a 24 month order, we'll give you 5 additional months (29 total) absolutely free!  The special applies to subscription orders from new members and returning members as well as extension orders from existing members.

As old-timers know, the best time to subscribe or renew an existing account is now, during one of our specials.  Because our prices are already very affordable, when we run any kind of special, it is something that everyone should take advantage of.

IMPORTANT NOTE: Existing members don't have to wait until their account is about to expire in order to take advantage of this special!  If you renew now, we'll simply add the additional time to your expiration date regardless of when that date is.

Here are some answers to some questions you might have about our Holiday Special:

Q: I'm an existing member with less than 12 months to go before my account expires.  What should I do?

A: If you are happy with our service, my strong advice is to renew now for 6 or 12 months and take advantage of the special.  It's the most cost-effective way to ensure that you have access to all of our subscriber features.  For example, by ordering one year of our "Extra" service now, you will save $99.35 (28.4%) over the cost of paying month-to-month.  By the way, to see how many months you have left on your current membership, click on the "Your Account" link at the top of any of our pages.

Q: I'm an existing member with more than a year to go before my account expires.  What should I do?

A: We typically run two specials per year.  While we can't guarantee when our next special will be, we often hold a special around the middle of the year.  That means you can choose to either renew now in order to lock in the pricing or wait until next year.

Q: I'm not a subscriber yet but I'd like to try out your service and possibly take advantage of your special pricing.  What should I do?

A: Follow these steps to test out our service and then, hopefully, take advantage of our Holiday Special:

1.) Sign up for 1 month of our "Extra" service. Our 1 month subscription comes with a 10-day money back guarantee which means that you'll have 10 days to test drive our service and see if it is what you expect.

2.) If you don't like our service, just let us know within the first 10 days.  We'll refund your money completely.

3.) If you like our service, you can then place a renewal order for either 6-, 12-, or 24-months of service before the end of the month in order to lock in our Holiday Special rates.  We'll simply add the additional months on to the end of your original subscription.

Q: I have a coupon code from your Long-Term Subscriber Loyalty Program.  Can I use that coupon along with the Holiday Special?

A: Absolutely!  Combining their Loyalty Discount with one of our Specials is how loyal, long-term members can get the biggest savings.  Just be sure to enter your coupon code into the order form when placing your renewal order.

 

Existing Members: Click here to place a renewal order now.

New Members: Click here to learn more about our different service levels

 

One last tip: Don't delay.  Our Holiday Special will be over before you know it.

- Chip

 

Big Banks And Big Brokers Blow Through Resistance

Friday saw an outstanding jobs number that was 25-50% higher than the expectations. The immediate take on that was the Federal Reserve would have to raise interest rates sooner than the expectations. All that meant that there would be an interest spread for the banks to start working with and all of the big banks and brokers broke through their respective ceilings.

Here is the weekly for three of the big banks. Two of these three closed last week below these horizontal resistance areas. Wells Fargo was marginally higher.

Here is the daily of the same three. This can only be considered as a bullish breakout for the industry group.

Continue reading "Big Banks And Big Brokers Blow Through Resistance" »

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