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August 2005

ChartWatchers

RYDEX CASH FLOW RATIO FAVORS BULLS

by Chip Anderson

There is growing evidence that a bull market top is finally in place, but not all the evidence supports that scenario. For example, the Rydex Cash Flow Ratio shows that bearish sentiment is again approaching record levels, indicating that another run at new price highs could be in the cards. Decision Point's Rydex Cash Flow Ratio differs from the Asset Ratio in that it is based upon a cumulative total of daily net cash flow for each of the Rydex mutual funds, not raw asset levels. The Cash Flow Ratio is calculated by dividing the total bear fund cash flow plus money market cash by the Read More 

ChartWatchers

HOUSING INDEX ($HGX) COMING INTO CLEAR FOCUS

by Chip Anderson

The current broader market decline has brought the Housing Index ($HGX) into clear focus; magazine after newspaper after TV show are talking about whether housing is overvalued and ready for a decline. We will save our thoughts for this for another time, but we do have some technical thoughts on $HGX. We find the chart trending from the lower left to the upper right and what is defined as a "bull market"; but we are finding opportunities to be short with greater confidence if in fact several 'key levels' are violated. First, we expect the 18-week exponential moving average at 527 to be Read More 

ChartWatchers

JOHN MURPHY'S BACK FROM VACATION

by Chip Anderson

- After a week off, John's back at his perch, watching the markets like a hawk and reporting the technical developments to his subscribers. John reports that his trip to Yellowstone National Park and the Grand Tetons was spectacular and very relaxing although he did confess to sneaking a glance at the markets "once or twice" while there. Welcome back, John! ANOTHER STOCKCHARTER'S JOURNEY - Another member of the StockCharts.com family is a guy named Pete Behmer. Pete recently took some time off from work to pursue his long-time dream of hiking the Pacific Crest Trail from Mexico to Read More 

ChartWatchers

NYSE BULLISH PERCENT INDEX IS OVERBOUGHT ...

by Chip Anderson

One of the ways to determine if the stock market is in a long-term overbought or oversold area is to chart the NYSE Bullish Percent Index which is shown in the chart below. The BPNYA measures the percent of stocks that are on point & figure buy signals. The two key numbers on the chart are 30 and 70. Readings under 30 show the market in a major oversold condition. Readings over 70 show a major overbought condition. The chart shows that the index traded over 70 three times since the start of 2004. A more dangerous signal is given when the line drops back under 70. That's a sign that Read More 

ChartWatchers

Hello Fellow ChartWatchers!

by Chip Anderson

The Dow continues to oscillate around 10,600 without much direction right now - sometimes getting near 10,700 - other times falling as low as 10,500. Now that the two major moving averages (50-day and 200-day) have essentially "merged" near the 10,550 mark, they should provide some additional technical support and may help get things moving again. John, Richard, and Carl have some additional thoughts below however. Read More 

ChartWatchers

BREADTH REMAINS STRONG

by Chip Anderson

Bullish and bearish divergences in the AD Line often precede significant bottoms and tops. Even though reversals are certainly possible when the AD Line is keeping pace, they are the exception rather than the rule. (Note: The Advance Decline Line is a cumulative measure of advancing issues less declining issues). As the chart above shows, a large bullish divergence preceded the August low as the NYSE Composite formed an equal low and the AD Line formed a sharply higher low. In addition, a smaller bullish divergence formed in April and May. This foreshadowed the May low and led to a Read More 

ChartWatchers

GOLDOLLAR INDEX SHOWS GOLD'S STRENGTH

by Chip Anderson

Generally speaking, gold and the dollar have an inverse relationship -- a rising dollar causes the price of gold to decline and vice versa; however, supply and demand pressures also influence the price of gold, but it is often difficult to see them. For this we use the GolDollar Index. The GolDollar Index was invented buy Tom McClellan (www.mcoscillator.com), and is calculated by multiplying the price of gold by the U.S. Dollar Index. (We divide the result by 10 to keep the numbers from getting too big.) Its purpose is to cancel the effects of currency fluctuations on the price of gold Read More 

ChartWatchers

JOHN MURPHY ON VACATION THIS WEEK -

by Chip Anderson

John is taking a well-deserved break this week. Watch for updates from other respected StockCharts commentators during John's absence. SHARPCHARTS 2 BETA 7 PROGRESS REPORT - While it might seem we have not been making advances on this new service, behind the scene, we have greatly enhanced our hardware ensuring any performance issues are taken care of before we launch this terrific new charting engine.  Standby for Beta 7 (hopefully the last beta version) to be released soon.  And thanks for your patience - it will be worth it. Read More 

ChartWatchers

S&P CONTINUES TO WEAKEN, MACD TURNS DOWN ...

by Chip Anderson

The market's short-term picture continues to weaken. Yesterday I wrote about the MACD lines for the S&P 500 being on the verge of turning negative. They did that today for the S&P and several other major market averages. That signals the start of a short- to intermediate-term correction. For the S&P 500 SPDRs (Chart 1), the first significant test of support will come around the 122 level. Two peaks were formed around that level (March and June) prior to July's upside breakout. On pullbacks, an index is supposed to find support along old breakout points. Another potential Read More 

ChartWatchers

Hello Fellow ChartWatchers!

by Chip Anderson

Having cracked the 10,600 resistance level, the Dow immediately ran into problems at 10,700 and then Friday's session ended in a disappointing close back below 10,600. Volume has remained relatively light. All in all, a picture of a directionless market during the summer doldrums. But let's see what our other commentators think Read More