ChartWatchers Newsletter logo

April 2005

ChartWatchers

DOWNSIDE TARGET FOR THE NASDAQ

by Chip Anderson

The current pattern at work in the Nasdaq looks quite similar to prior patterns for the S&P 500 and Dow Transports. Both of these indices had extended advances, failed to hold a breakout to new highs, broke trendline support and then continued to support from the prior low (1163 and 3454). In fact, the S&P 500 and the Dow Transports continued lower on Friday and broke below their prior lows. The patterns looks like large double tops and the support breaks are quite bearish. Turning to the Nasdaq, we can see that a similar scenario projects a move to around Read More 

ChartWatchers

S&P 600 SMALL-CAP NEW HIGHS and NEW LOWS

by Chip Anderson

At DecisionPoint.com we have recently added a chart of S&P 600 Small-Cap 52-week new highs and new lows (NHNL). (We also have NHNL charts of the S&P 500, S&P 400 Mid-Cap, NYSE, and Nasdaq). This allows us to examine and determine the condition of each sector. As with other indicators, we look for divergences between the indicator and prices. New lows are particularly good for identifying long-term bottoms. Note the sharp contraction of new lows in March 2003 compared to October 2002 associated with price lows that were about the same. This positive divergence was a good sign Read More 

ChartWatchers

"MINI-CRASH" FOR THE NASDAQ

by Chip Anderson

From Tuesday's close last week; the Nasdaq Composite ($COMPQ) has declined in mini-crash' fashion: down -4.8%. The question is whether there are further declines ahead or whether a sustainable rally will develop back towards the highs or even new highs. An instructive chart to this end is the monthly chart; which shows a major bearish consolidation after the 2000-2002 declines. In fact, trendline support was recently violated, with the next to last support' to be tested being the major 25-month moving average the other being the 2004 low. Friday's trade broke below this moving average by Read More 

ChartWatchers

HOW FAR DOWN?

by Chip Anderson

After this week's breakdown, there can be little doubt that the cyclical bull market that started in October 2002 has ended. The question now is how far down can the market drop. The daily bars in the chart below show the S&P 500 SPDR breaking its January low and closing beneath its 200-day moving average. Downside volume was very heavy. There's a support level at 108.60 at its late October low. But I think the S&P (and the other major stock averages) are headed all the way back to its August low. That's based partially on standard chart analysis, and partially on Elliott Wave Read More 

ChartWatchers

Hello Fellow ChartWatchers!

by Chip Anderson

With the markets down for the past three days, the Internet is all abuzz with predictions and prognostications about what's going to happen next. As you try to sort it all out, remember that charts don't lie. Charts don't have an agenda. And charts might be your only friend right now. OK, OK, charts AND our crack team of market commentators. Read on to see what John, Richard, Carl and Arthur have to say about last week's big happenings Read More 

ChartWatchers

SEMIS NEED HELP

by Chip Anderson

It remains a one horse race among the key Nasdaq industry groups. The Networking iShares (IGN), Software HOLDRS (SWH) and Internet HOLDRS (HHH) are weak and trading near their lows for the year (gray oval). However, the Semiconductor HOLDRS (SMH) are holding up the best and still well above their January low. Strength in semiconductors is certainly positive for the tech sector, but even semis need a little help from their friends. SMH shows potential, but remains short of a minor or major resistance breakout. The big pattern at work is an inverse head-and-shoulders. These are Read More 

ChartWatchers

CASH FLOW SENTIMENT GAGE

by Chip Anderson

The Rydex Asset Ratio measures the amount of bullish and bearish sentiment by tracking and comparing the total assets in Rydex bull and bear funds. Decision Point also calculates the Rydex Cash Flow Ratio, an indicator we developed that accounts for the actual cash flowing into and out of the funds by canceling the effect of changing share prices on total assets. On the chart below we can see that bulls were not nearly committed at the March price top as they were at the December 2004 top. I have drawn a line across the corresponding Ratio tops to illustrate the negative divergence Read More 

ChartWatchers

WHAT YOU DIDN'T NOTICE LAST WEEK -

by Chip Anderson

Did you know that our primary datafeed circuit went out last week? Betcha' didn't even notice. The reason is that our secondary circuit immediately kicked in and kept everything running smoothly. Prior to last fall's datafeed upgrade, that would not have happened and the site would have been down for several days. That secondary circuit is just one more example of the (mostly hidden) improvements we've been working on to ensure that StockCharts.com continues to serve the best charts on the Internet.   Read More 

ChartWatchers

BAD NEWS FOR ECONOMICS, DOW THREATENING LOW

by Chip Anderson

THE ECONOMIC NEWS ISN'T GOOD It's interesting to see the media put a positive spin on recent economic reports. It was reported this week that fourth GDP growth was lower than expected while prices were higher than expected. That was described as good for the economy. Earlier this morning, the government reported that March non-farm payroll numbers were only half what was expected. That was reported as good because it lessened the chances for higher interest rates. A report of lower consumer confidence was viewed as a non-event. The ISM report showed a weakening in manufacturing Read More 

ChartWatchers

Hello Fellow ChartWatchers!

by Chip Anderson

With the Dow getting ready to test its January lows, things are really getting busy here at StockCharts. Our market commentators have all the market angles covered below, so I wanted to take a couple of minutes and update you on our progress with SharpCharts2 - our soon-to-be-released replacement for our current charting tool. Our Beta release program is winding down now and we have been making great progress incorporating everyone's feedback into the newest version. We are hoping to have the final Beta version out before the end of the month with the final version appearing shortly Read More