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September 2004

ChartWatchers

CYCLICALS OUTPERFOMING STAPLES

by Chip Anderson

There is a most interesting development between the Consumer Discretionary SPDR (XLY) and the Consumer Staple SPDR (XLP). Relative to the S&P 500, Consumer Discretionary stocks (cyclicals) surged (green arrow) over the last few weeks while Consumer Staple stocks declined (red arrow). Weakness in staples and strength in cyclicals bodes well for the market and the economy overall. In addition, the pattern looks like a large falling wedge and it would take a move above the June high to turn bullish on cyclicals again. Taking this relationship one step further, we can see that Read More 

ChartWatchers

A LONGER-TERM MARKET VIEW

by Chip Anderson

Daily charts can be used to fine tune entry and exit points, but they should be interpreted within the context of what weekly charts and indicators tell us. For example, some shorter-term indicators show the market to be overbought, but the weekly chart implies that another leg of the bull market is just beginning. At the beginning of this year the market began a corrective phase that lasted about eight months, climaxing with the shakeout selling into the August lows. As you can see on the chart, bull market correction often conclude when the price index dips below the moving averages Read More 

ChartWatchers

TIME TO SHORT TECH SHARES?

by Chip Anderson

The current Nasdaq Composite rally is at an �inflection point� much in the same manner it was during the week of July 14th as prices slid to new yearly lows. The simple indicator we are looking at is the 60-week moving average, which in the past has an enviable record as an inflection point. If prices breakout above this level, then higher prices will develop; however, if the 60-wma acts as resistance as we believe it shall given the declining 200-wma�then a larger decline will be underway. Thus, if one is inclined to be short technology shares�this is certainly the �best risk-adjusted� Read More 

ChartWatchers

BUZZING ABOUT MURPHY

by Chip Anderson

MURPHY SURVEY RESULTS - Last week we conducted a customer satisfaction survey for the Murphy Market Message. As a direct result of that survey, we've added a couple of new features to the "John Murphy" section of our site including a "Comments" box that allows Market Message subscribers to tell John how he's doing. The comments that readers have been sending in have helped John better target his recent articles to his audience. This results have been nothing short of spectacular. See the yellow box above for examples of what readers are now saying about the Murphy Market Message Read More 

ChartWatchers

ON USING MOVING AVERAGES

by Chip Anderson

WHY WE USE MOVING AVERAGES You've probably noticed that I rely very heavily on moving average lines. There are some good reasons for that. The main one is that they are one of the simplest ways to spot trend changes. But not all moving averages are equal. The 50-day moving average, for example, is most useful in spotting "intermediate" trend changes which can last anywhere from one to three months. A 20-day moving average is better for spotting "short-term" trend changes which can last for days or weeks. The 200-day average helps determine the direction of the "long-term" trend of a Read More 

ChartWatchers

Hello Fellow ChartWatchers!

by Chip Anderson

We had some good response to last issues do-it-yourself approach to analyzing the Dow chart so let's try it again. Ready? Study the chart below and decided for yourself if it is bullish or bearish and why: My take is that this chart looks pretty bearish right now. The index appears to be struggling with both the 200-day MA and the 10,300 resistance level. It put in a local top at 10,390 on Sept. 8th but quickly fell back below 10,300 and has moved sideways since then. Unfortunately, the Sept. 8th top is still well below the 10,487 top that appeared in June. That means that the index is Read More 

ChartWatchers

A "NEW AND IMPROVED" RYDEX RATIO

by Chip Anderson

The Rydex Asset Ratio has been around for eight or ten years, and it is a favorite among sentiment indicators because it is based, not upon opinion polls, but upon where people are actually putting their money. It is calculated by dividing total assets in bear index and money market funds by the total assets in bull index and sector funds. Recently Decision Point introduced the Rydex Cash Flow Ratio. It uses the same basic formula, but, instead of total assets, it uses Cumulative Cash Flow (CCFL) totals for the same funds. To determine CCFL we calculate daily net cash flow, which is the Read More 

ChartWatchers

SEMIS NOT THE LEADERS THEY ONCE WERE

by Chip Anderson

The recent carnage in the Semiconductor Index (SOX) moved to the forefront on Friday with INTC’s poor guidance moving forward. Thus, we must look at the SOX within the context of its relationship with the S&P 500 (SPX), and for this we use the ratio of the two Quite simply, we could very well see s a short-term bottom in the ratio in the days or weeks ahead – but it certainly isn’t within a historical context “the bottom” we would feel comfortable buying into on a longer-term basis. Our momentum indicators are now oversold, but it has paid to wait until a “positive divergence’ forms Read More 

ChartWatchers

NEW DATA FEED IS IN!

by Chip Anderson

OUR NEW DATA FEED IS IN! - Well, there were some bumps in the road, but we've managed to get our new ThomsonONE data feed installed and working last week. To those of you that were patient with us while we fixed the problems, we say "Thanks!" Your understanding and clear problem reports were very helpful.Because of the problems that occurred, we have added one free week of service to every StockCharts.com member that logged in to their charting account last week. Everyone who qualifies for this offer should have already had this additional time added to their Read More 

ChartWatchers

TELECOMM HAVE STRONG DAYS

by Chip Anderson

Telecom stocks had a good chart day. The AMEX Telecom iShares (IYZ) broke out to a new six-month high today. Its relative strength line has been rising since late June. Two of the biggest reasons for today's strength were SBC and Verizon Communications which are two of the biggest holdings in the ETF. SBC rose to the highest level in seven months. Verizon ended the day at a new 52-week high. Both relative strength lines have been jumping for the last two months. Read More 

ChartWatchers

Hello Fellow ChartWatchers!

by Chip Anderson

Thursday's big rally for the Dow Industrials was unexpected and significant. Check out the chart below and see if you can spot the reasons why: As anticipated, the Dow faltered after hitting its 50-day moving average line. That line was also at the 10,200 resistance level marked by the peak in late July and so the odds of a reversal there were pretty good. Sure enough, the Dow started moving lower on Monday, but rallies on Tuesday and Wednesday re-tested the resistance level and Thursday's big follow-up pushed things well clear. The MACD line moved into positive territory and the Read More